Oil prices fell 3% to less than $ 58 a barrel yesterday, continuing the decline recorded last session, as it is under pressure from growing fears of recession, and a sudden increase in US crude oil inventories.
In a sign that investors are worried that the US economy, the world's largest, may be heading towards recession, which will negatively affect oil demand, the US Treasury yield curve flipped yesterday for the first time since 2007.
Brent crude fell $ 1.81, or 3 percent, to $ 57.67 a barrel. US crude fell $ 1.03 to $ 54.2 a barrel.
The price of Brent is still up 10% since the start of the year, thanks to production cuts led by the Organization of Petroleum Exporting Countries (OPEC) and allies such as Russia in the group known as OPEC +.
In July, OPEC + agreed to extend oil production cuts until March 2020, to support crude. On August 8, a Saudi official hinted at possible further steps, saying that "Saudi Arabia is committed to doing everything necessary to keep the market stable next year."
But OPEC's efforts have been overshadowed by concerns about the global economy, amid a trade dispute between the United States and China, uncertainty over Britain's secession from the EU, rising US crude stocks and rising shale oil production. "The market is very concerned about global growth," said Tamas Varga, an official at Pfm Oil Brokerage.
China reported disappointing data for July, including industrial production growth at its lowest level in more than 17 years.
Declining exports have pushed Germany's economy into recession in the second quarter. An unexpected increase in US crude oil inventories for the second week adds to pressure on oil prices.
Crude oil inventories rose 1.6 million barrels last week, compared with analysts' expectations of a 2.8 million barrel decline, the Energy Information Administration said.