On Monday, oil prices plunged at almost 1 percent, as concerns about the approaching recession may outweigh supply disruptions from U.S. sanctions on Iran and Venezuela and from some OPEC’s production cutbacks.
From its previous trading, Brent crude oil futures were at $66.56 per barrel, down 47 cents, or 0.7 percent.
Since last week, more than 3 percent declined in both the crude standard oil price after November 2018’s highest hit. Futures contracts on US West Texas Intermediate fell at $58.52 per barrel, down 52 cents, or 0.9 percent.
Since last week, crude oil prices have weakened and shed more than 3 percent. This came after they reached a record-high in November 2018.
After a pessimistic remark last week, from the U.S. Federal Reserve, possible concerns that has to do with US recession reappeared. For the first time, since 2007, 10-year treasury yield slipped under the three-month rate.
An upcoming recession was indicated by the inverted yield curve. It is where long-term rates fall below short-term, historically.
Europe’s biggest economy is vulnerable to a widespread global turndown that damaged the manufacturing output data in Germany. It could fall off for the third straight month.
U.S. bank Morgan Stanley said, “Estimates for growth and earnings have been revised down materially across all major regions.”
The supply cuts that are being experienced in the oil markets was led by the producer club of OPEC. The troubled economic outlook “overshadowed the supply-side issues,” the Australia and New Zealand Bank stated.
Around 1.2 million barrels of oil supply per day were guaranteed by The Organization of the Petroleum Exporting Countries this year to support markets, together with non-affiliated allies such as Russia. A crude price of $70 per barrel was pushed by the OPEC’s de-facto leader.
On its third consecutive week, the precious metal, gold, gained and rose 1%. That was its highest level since February. The Comex division of the New York Mercantile Exchange traded gold futures above 0.3% at $1322.05.
On a written note, Toronto-Dominion Bank Securities analyst said, “Price action in gold continues to lend strength to our view that expected data deterioration will help spark a gold rally as interest rates continue to fall in the context of a slowing global economy.”
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