Oil prices slid about two per cent to a 12- week low in volatile trade yesterday, extending Tuesday’s heavy losses as investors grew more worried energy demand would take a hit in a potential global recession. Brent futures for September delivery fell $2.20, or 2.1 per cent, to $100.57 a barrel by 1:27 p.m. EDT (1727 GMT). U.S. West Texas Intermediate (WTI) crude fell $1.54, or 1.6 per cent, to $97.96. Both benchmarks were in technically oversold territory for a second straight day, on track for their lowest closes since April 11. Trade was volatile, with both benchmarks retreating sharply from early rises of over $2 a barrel on supply concerns.
Crude futures has been extremely volatile for months. On Tuesday, Brent slid nine per cent and WTI eight per cent. Brent’s $10.73 drop was the third biggest for the contract since it started trading in 1988. The biggest drop was $16.84 in March. U.S. diesel futures also fell about five per cent. Analysts at UBS, a bank, cited “recession fears, the unwinding of the oil trade as inflation hedge, a stronger US dollar, hedge funds reacting to negative oil price momentum, producer hedging, and new mobility restriction concerns in China.”