Oil prices remained around their lowest levels since February on Friday, as concerns about a possible recession and a drop in gasoline consumption continued to roil markets.

Brent crude had risen 37 cents, or 0.4 percent, to $94.49 per barrel. West Texas Intermediate crude in the United States was up 27 cents, or 0.3 percent, to $88.81.

Concerns over a prolonged recession have grown since the Bank of England warned on Thursday of a prolonged downturn after raising interest rates by the greatest since 1995.

Everyone is taking the possibility of recession much more seriously, as we continue to see a very tight market and producers with no ability to change that.

Prices are falling despite relatively limited supplies, as evidenced by lingering backwardation, a market structure in which current prices exceed future months’ prices.

According to OPEC data, the OPEC+ producing group decided last week to increase its oil output target by 100,000 barrels per day (BPD) in September, but this was one of the smaller increases since such quotas were created in 1982. Concerns about supply should rise as winter approaches, with European Union restrictions prohibiting seaborne imports of Russian crude and oil products slated to take effect on December 5.

Oil Prices Have Fallen Sharply from Their Recent Peaks

Oil prices have plummeted from recent highs, yet there is still reason to buy oil stocks.

It is because energy prices should remain high or rise further.

The United States must replenish 180 million barrels of strategic reserves depleted to meet demand while supply remains tight.

Brent crude futures and West Texas Intermediate futures in the United States rose above $120 per barrel this year, but are now trading at $96.88 and $90.88 per barrel, respectively.

Nonetheless, both benchmarks are more than 40% higher than a year ago.


Gas Prices Are Finally Plummeting

In this inflationary summer, there is some good news: Gas prices are finally falling—and falling, falling, and falling some more. Fuel prices have already declined for more than 50 days and are on course to fall by approximately 20% from June’s top of $5.02 per gallon to a national average of $4.

Although prices never reached the inflation-adjusted 2008 high, the presence of the $5 price tag became a symbol of the country’s inflationary problems. However, given that the Consumer Price Index remains high for the time being, Russia is still at war with Ukraine, and fossil fuel companies continue to make record profits, it may not be immediately evident what is causing the present downturn.

The EIA also reported on Wednesday that crude oil and gasoline stocks in the United States had increased in the previous week. It may appear to be an unexpected development given that domestic production and refining capacity are relatively stable. Still, as an S&P analyst noted on Twitter, Biden’s emergency sales of barrels from the Strategic Petroleum Reserve are likely to have helped oil companies bolster their holdings. Despite a diplomatic setback, it could help Biden domestically: OPEC+, the group of Gulf petroleum states, only agreed to a minor increase in crude production, despite the US president’s in-person pleas.

The EIA’s estimates on Wednesday triggered a drop in gasoline and oil futures prices to their lowest levels since February when Russia invaded Ukraine. Investors are currently less confident in the energy business than earlier this year, owing to recession fears fueled by the Federal Reserve’s interest rate hikes, which they believe would keep oil demand low. The slowing of growth in China and the United States exaggerates such pessimism, two countries whose economic woes hurt the rest of the world.

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