Deepened global recession worries impact crude oil

After consolidating above $69.00 earlier on Wednesday, oil price is trading a little below at $68.92 at the time of writing ahead of oil inventory data by the US API amid strong US consumer spending and soft labour market conditions that support chances of one more rate hike by the Fed in June 2023 as long as the economic outlook for the United States economy is still in bad shape.

The German economy has already slipped into recession after reporting a contraction in Gross Domestic Product (GDP) figures consecutively for two quarters.

Tensions between Russia and Saudi Arabia have become higher as the Russians are consistently pumping cheaper oil into the global economy, and yjis accordingly undermines efforts made by the latter to bolster energy prices Oil price is expected to extend its losses as fears of a recession in the global economy are accelerating.

Contracting Chinese factory activity has also weighed on oil prices. In Asia, China’s National Bureau of Statistics (NBS) reported Manufacturing PMI at 48.8, lower than the estimates of 49.4 and the former release of 49.2. Investors should not that a figure below 50.0 is itself considered a contraction. It is worth mentioning that China is the largest importer of oil in the world and weak economic activities in China would have a significant impact on the oil price.

Later this week, OPEC’s meeting will focus on output cuts discussions in order to support energy prices. The impact of cutting overall production further by OPEC+ members excluding Russia could be nullified as Russia is not committed to keeping the pledge further.

On late Wednesday, investors keep an eye on the release of oil inventories for the week ending May 26 by the US American Petroleum Institute (API).