Oil briefly weakened on Wednesday, with Brent crude falling close to its lowest this year, pressured by concern about recession and easing fears that a Western cap on Russian oil prices would significantly curb supply.
Warnings from big U.S. banks about a likely recession next year weighed, and supported the U.S. dollar. A stronger dollar makes oil more expensive for holders of other currencies and tends to dampen appetite for risk assets.
Brent crude touched $77.74 U.S. Wednesday, the lowest since Jan. 3, before rebounding to trade at $79.40 per barrel. U.S. crude reached its lowest level since late December before recovering to trade 0.2% higher at $74.37.
Brent settled below $80 on Tuesday for the only the second time in 2022 and has unwound the year’s gains, which had lifted prices close to the all-time high of $147 in March after Russia invaded Ukraine.
Fears were easing that the price cap on Russian crude could cause a supply shock. Russia, the Vedomosti daily reported on Wednesday, is considering options including banning oil sales to some countries to counter the cap imposed by Western powers.
Also in focus was Tuesday’s report from industry group the American Petroleum Institute which, according to market sources, said that crude stocks fell by around 6.4 million barrels.
What's more, the latest U.S. supply report from the Energy Information Administration was due before noon EST. Oil watchers were keen to see whether it confirms the large decline in crude stocks.
