African News Agency
OIL SLIPS ON RECESSION FEARS OIL PRICES slid about 1% yesterday as a political standoff over the US debt ceiling stoked recession jitters in the world’s biggest oil consumer, while rising US jobless claims weighed on sentiment and a stronger dollar pressured oil too. Brent futures dropped 73 cents, or 1%, to $75.68 (about R1 419) a barrel by 5.19pm. US West Texas Intermediate crude lost 92c, or 1.3%, to $71.64. The dollar rose to its highest in a week against a basket of major currencies, after recent jobless claims data strengthened the case for the Federal Reserve (Fed) to halt interest rate hikes but did not prompt expectations of year-end rate cuts. A stronger dollar makes oil more expensive in other countries. Higher interest rates can weigh on oil demand by boosting borrowing costs, pressuring economic growth. US Treasury secretary Janet Yellen urged Congress to raise the $31.4 trillion federal debt limit and avert an unprecedented default that would trigger a global economic downturn. “Uncertainties regarding the US debt ceiling, recent banking issues that could prompt a credit crunch across much of the oil industry and continued strong possibility of a recession remain ... significant obstacles” for oil markets, analysts at energy consulting firm Ritterbusch and Associates said in a note. An extended period of high interest rates could put more stress on banks, but would be necessary if inflation stays stubbornly high, said Minneapolis Fed president Neel Kashkari. US producer prices rose moderately last month, the smallest annual producer inflation increase in more than two years. US President Joe Biden’s administration unveiled a sweeping plan to slash greenhouse gas emissions from the power industry, one of the biggest steps so far in its effort to decarbonise the American economy to fight climate change.