Oil prices were mixed in Asian trade on Wednesday after falling to their lowest settlement levels this year as economic uncertainty and the prospect of higher interest rates pressured prices.
Brent crude futures rose 17 cents, or 0.2 percent to $79.52 a barrel. Last session the benchmark fell below $80 for the second time in 2022.
US crude futures fell 3 cents to $74.22 a barrel.
Tuesday’s slump was the largest daily decline in Brent prices since late September, which have traded in a $62 range this year.
Wall Street benchmarks also tumbled on Tuesday on uncertainty around the direction of Federal Reserve rate hikes and further talk of a looming recession.
These fears are sparked by strong economic data or hawkish signals from other policymakers.
Data released on Monday showing US services industry activity unexpectedly picked up in November and last week’s robust US payrolls report raised doubts about how soon the Fed might ease monetary policy.
Oil prices have dropped by more than 1 percent for three straight sessions, giving up most of their gains for the year.
Service-sector activity in China has hit a six-month low, and European economies have slowed due to the high cost of energy and rising interest rates.
Oil prices have slumped since early November as traders concluded the price cap on Russia’s exports introduced by the United States, the European Union and their allies will have little impact on crude availability.
Earlier fears the cap would disrupt crude flows boosted Brent prices and calendar spreads throughout October – even as the outlook for the global economy and oil consumption deteriorated.
Front-month Brent futures closed at almost $97 per barrel on Oct. 27, up from $84 a month earlier, well above the long-term inflation-adjusted average of $60 since 1990.
Brent’s six-month spread, the best indicator of the expected production-consumption balance, was trading in a backwardation of nearly $9 per barrel, in the 99th percentile for all trading days since 1990.
Extreme backwardation implied traders expected the balance to remain tight, with a further drawdown of already depleted inventories, and more upward pressure on oil prices.
But something caused expectations to change in the first week of November, with prices and spreads declining almost continuously since then.
