Oil prices fall on warnings of economic slowdown

LONDON, July 19 (Reuters) – Oil prices fell 2% on Tuesday after climbing more than $5 a barrel in the previous session, weighed on fears that an economic slowdown could hit demand for oil, although tight supply and dollar weakness limited some losses.

Brent futures for September settlement were down $1.64, or 1.5%, at $104.63 a barrel at 1328 GMT. The contract rose 5.1% on Monday, the biggest percentage gain since April 12.

WTI crude futures for August delivery fell $1.63, or 1.6%, to $100.97 a barrel. The contract climbed 5.1% on Monday, the biggest percentage gain since May 11.

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The August WTI contract expires on Wednesday, and the most actively traded September contract was at $97.50 a barrel, down $1.92, or 1.9%.

The International Monetary Fund warned on Tuesday that any Russian action to cut gas supplies to Europe would trigger economic contractions of more than 5% over the next year in the Czech Republic, Hungary, Slovakia and Italy. , reported the Financial Times.

Russia’s Gazprom told customers in Europe it could not guarantee gas supplies due to “extraordinary” circumstances, according to a letter seen by Reuters. Read more

Expectations of rising crude oil inventories in the United States also weighed on prices. A preliminary Reuters poll showed U.S. crude and distillate supplies may have risen last week, while gasoline inventories likely fell. Read more

Oil prices have oscillated between supply worries as Western sanctions on Russian crude and Ukrainian products disrupt trade flows, and fears that the central bank’s efforts to tame inflation could trigger a recession. destructive of demand.

US President Joe Biden last week visited Saudi Arabia, the world’s largest oil exporter, hoping to strike a deal on increased oil production to rein in fuel prices.

However, officials from Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), have given no clear assurances that production will be increased.

The kingdom’s foreign minister said on Tuesday he saw no shortage of oil in the market, but a lack of oil refining capacity, forcing more investment to process crude into various products. Read more

“Prices climbed aggressively as the tight situation on the supply front returned to the spotlight,” said Stephen Brennock of brokerage PVM.

Oil prices were also supported by a weaker US dollar on Tuesday, which hovered around a one-week low, making greenback-dominated oil slightly cheaper for buyers holding other currencies.

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Additional reporting by Muyu Xu in Singapore; Editing by David Evans, Louise Heavens and Jan Harvey

Our standards: The Thomson Reuters Trust Principles.

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