Brent falls to one-month low amid recession fears

The front-month ICE Brent contract dropped $1.43/bbl on the day, to $81.67/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

A greater-than-expected draw in US commercial crude inventories and worries surrounding supply tightening prevented Brent's price from plummeting lower.

US commercial crude inventories declined by 4.58 million bbls on the week, to 465.97 million bbls on 14 April, according to US Energy Information Administration (EIA) data. The weekly draw exceeded the 2.68-million-bbl increase estimated by the American Petroleum Institute (API).

Meanwhile, the International Energy Agency (IEA) has estimated that global crude demand will hit record levels this year. However, there are concerns that rising demand will outpace the growth in production, leading to a tighter oil market.

Downward pressure:

The US Federal Reserve's Beige Book economic report has signalled an economic slowdown in the US. Demand jitters triggered by a looming recession in the US have kept Brent's price in the red.

The Fed's Beige Book observes that tighter credit conditions have made it difficult for businesses to borrow money, particularly after the collapse of the Silicon Valley Bank (SVB). The report also shows that the labour market is tightening across the US. These factors can contribute to an economic downturn and increase the risk of a recession, it adds.

By Konica Bhatt

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