London, (Business News Report)|| Oil prices fell, on Wednesday, in light of expectations that the US economy will enter a recession in the coming period.
The Joe Biden administration is preparing to intensify its fight against high oil prices by calling for a tax exemption on gasoline.
In Wednesday’s trading, West Texas Intermediate crude fell, to below $106 a barrel, with investors worried about the impact of higher interest rates in the United States, according to Bloomberg.
Federal Reserve Chairman Jerome Powell is scheduled to testify before Congress on Wednesday about his attempt to rein in inflation at the fastest pace in decades.
Concerns are growing about a possible economic slowdown in the US, which could weaken energy demand, especially after the Federal Reserve raised interest rates.
Prominent economic figures, including Tesla CEO Elon Musk and economist Nouriel Roubini, also warned of the increasing possibility of the world’s largest economy falling into a recession.
West Texas Intermediate crude for August delivery fell 3.5% to $105.73 a barrel on the New York Mercantile Exchange at 11:15 am in Singapore.
Brent crude for August delivery lost 3.1% to $111.06 a barrel on the European ICE Futures Exchange.
Bloomberg news agency quoted an informed source as saying that US President Joe Biden will call for a tax exemption on gasoline after the average retail price in the United States exceeded $5 per gallon this month after an increase of more than 50% in 2022.
Meanwhile, the White House asked the heads of 6 oil companies to meet on Thursday to discuss ways to reduce high energy prices.
Exxon Mobil warned this week that crude oil markets could suffer from tight supplies for years.
The Vitol Group, the world’s largest independent oil trader, indicated that crude prices will be supported by rising fuel demand in China.
The higher profit margins for refineries also provide an incentive to buy more barrels of crude oil.
Goldman Sachs said in a note: “With demand for commodities rising against supply; Markets remain tight even as growth rates slow, as evidenced by the high level of rapid decline in key markets such as oil.”
“Investors should remember that the slowdown caused by the Fed’s decisions is simply short-term relief of symptoms and inflation, not a cure for the problem of underinvestment,” he added.