Oil prices extended losses on Friday after hitting their lowest point in the previous session before Russia’s invasion of Ukraine in February, amid concerns over the impact of inflation on global growth and demand.
Brent was down 10 cents, or 0.1%, at $94.02 a barrel by 0047 GMT, while U.S. West Texas Intermediate was at $88.48 a barrel, down 6 cents.
“Crude oil fell further on demand concerns over a cloudy economic outlook,” said Tina Teng, an analyst at CMC Markets. “If commodities don’t price in a looming recession, they could be setting the stage for unemployment to start picking up and inflation to stay in place.” Prepare for an era of high ‘stagflation’.”
Fears of a recession intensified after the Bank of England warned the economy would remain sluggish after raising interest rates by the most since 1995.
Investors focused on the U.S. jobs report later in the day, which is expected to show nonfarm payrolls rose by 250,000 jobs last month after rising by 372,000 in June.
Any sign of a strengthening labor market could raise concerns about aggressive measures by the Federal Reserve to tame inflation.
“There are signs that high prices have dented demand for gasoline and distillates,” analysts at ANZ said in a note.
U.S. gasoline demand fell about 7% in July from a year earlier, while China’s coronavirus-free strategy is further fueling the recovery in the world’s second-largest economy, they added.
Still, the global crude oil market remains in backwardation, with spot prices higher than prices in the coming months, signaling tight supplies.
Supply concerns are expected to intensify as EU sanctions banning seaborne imports of Russian crude and petroleum products take effect on December 5.
OPEC leaders Saudi Arabia and the United Arab Emirates stand ready to “significantly increase” production if the world faces a severe supply crisis this winter, sources familiar with the thinking of major Gulf exporters said.
In September, OPEC+ raised its oil output target by 100,000 bpd. It was the smallest since OPEC quotas were introduced in 1982, OPEC data showed.
