Brent Crude fell below $85 a barrel for the first time since January yesterday amid concerns about a global economic slowdown.
Central banks around the world have hiked interest rates to quash inflation, further crimping oil demand.
At the same time, Russia’s invasion of Ukraine and China’s Covid-19 lockdowns have battered the global outlook for supply and demand.
The drop in oil prices is a “macro move led by a stronger dollar,” which is triggering fears of a recession, according to Amrita Sen, co-founder and director of research at Energy Aspects, who spoke to CBNC yesterday.
OPEC+, has this year ramped up oil output, looking to unwind record cuts put in place in 2020 after the pandemic slashed demand.
However, the surge against other currencies means dollar-denominated assets such as oil have grown more expensive for investors holding foreign currencies and “have weighed on futures prices,” according to John Morley, associate editorial director for EMEA crude and fuel oil at S&P Global.
FTSE 100
Despite the steep falls among housebuilders, the FTSE reduced its losses yesterday as the weaker pound gave a boost to dollar-earning constituents.
The index, still at its lowest in more than a year, closed flat, up 2.35 points at 7,020.95.
The more domestically focused FTSE 250 slid to its lowest since November 2020, falling 249.86 points, or 1.4 per cent, to 17,722.83.
Companies reporting today
- AG Barr: Half year results
- Close Brothers: Full year results
- Ferguson: Full year results
- Saga: Full year results
- SSP: Trading statement
- United Utilities: Trading statement