As investors increasingly worried that energy demand would be hit by a potential global recession, oil prices extended the previous session's decline on Wednesday, with two indicators rising more than $2 on supply concerns before falling more than $4 to hit a session low. Brent crude futures closed down 2% at $100.69 per barrel, while WTI oil futures closed down 1% at $98.53 per barrel. Both closed at their lowest level since April 11 and were technically oversold for the second day in a row. On Tuesday, WTI crude oil futures fell 8 per cent and Brent crude oil futures fell 9 per cent.

According to API data released earlier, crude oil stocks unexpectedly increased by 3.825 million barrels, gasoline stocks decreased by 1.814 million barrels, and refined oil stocks decreased by 635000 barrels in the week ended July 1. Oil prices fell slightly after the data were released.

Oil prices have also been hit by the surge in the dollar, which hit a nearly 20-year high against a basket of currencies, making crude oil more expensive for buyers of other currencies. At the same time, all oil fields and gas fields affected by the Norwegian oil sector strike are expected to resume full operation within a few days, putting further pressure on oil prices.

Professional opinion

Analysts at Goldman Sachs Group and UBS, the investment bank, said the fall in oil prices was due to fears of a recession.

In response, economists at Deutsche Bank predict that US GDP shrank at an annual rate of 0.6% in the second quarter, which will mean the second consecutive quarter of economic contraction, thus plunging the US economy into a technical recession. But they still expect the economy to grow by 0.6% for the whole year and fall into a full-blown recession by mid-2023.

In addition, IMF President Georgiyeva said that since the last update of economic forecasts, the global economic outlook is "significantly bleak" and does not rule out the possibility of a global recession in 2023. The International Monetary Fund will cut its previous forecast of 3.6% global economic growth in 2022 and 2023, and IMF economists are still hammering out new forecasts.

Ed Morse, global head of commodities research at Citigroup Inc, said the outlook for oil demand is likely to fall further as oil prices rise, with almost everyone lowering their expectations for demand this year. Citigroup Inc cut his demand growth forecast by about 1/3 to 240-2.5 million b / d, similar to those of the US Energy Information Administration (EIA) and the International Energy Agency (IEA). Citi reiterated its basic forecast for oil prices of $85 a barrel, adding that accelerated supply growth would continue at the end of the year.

Finally, while the weakness in oil prices this week is due to fears of a global recession and technical selling, market fundamentals have barely changed. The huge premium of Brent contracts over far-month contracts in recent months highlights the strength of the market.

In response, Goldman Sachs Group analyst Damien Courvalin and others said in a report that the possibility of recession is indeed rising, but it is too early for the oil market to succumb to such concerns. The global economy is still growing, and the growth of oil demand this year will significantly exceed the growth rate of GDP.