EU, US study Iran’s response to nuclear proposal China unexpectedly cuts key rates as economic data disappoints.
NEW YORK, Aug 16 (Reuters) – Oil prices fell more than 2 percent on Tuesday to their lowest level since before Russia’s invasion of Ukraine as economic data fueled concerns on a possible global recession, as the market awaited clarity on talks to revive a deal that could allow more Iranian oil exports.
Brent crude futures fell $2.27, or 2.4%, to $92.83 a barrel. The contract hit a session low of $92.51 a barrel, the lowest since February 18.
West Texas Intermediate (WTI) crude lost $2.31, or 2.6%, to $87.10 a barrel. The benchmark fell to a session low of $86.69 a barrel, the lowest since February 1.
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Contracts fell about 3% in their previous sessions.
The European Union and the United States said on Tuesday they were studying Iran’s response to what the EU has called its “final” proposal to save the 2015 nuclear deal after Tehran asked Washington to show flexibility. Read more
Iran responded to the proposal late Monday, but neither side provided any details.
“It’s still not clear what Iran said to the European Union last night, so some complicated elements may affect the outcome of the nuclear deal,” said UBS analyst Giovanni Staunovo.
Weak economic indicators weighed on prices.
U.S. homebuilding fell to the lowest level in nearly 1-1/2 years in July, weighed down by higher mortgage rates and building material prices, suggesting the housing market it could contract further in the third quarter. Read more
“Oil traders reacted because of concerns about an economic slowdown and housing uses for energy,” said Phil Flynn, analyst at Price Futures Group. “That took us by surprise.”
China’s central bank cut lending rates to try to revive demand as the country’s economy unexpectedly slowed in July after Beijing’s zero-Covid policy and a housing crisis slowed factory and retail activity. Read more
State media quoted Premier Li Keqiang as saying that China will reasonably step up macro policy support for the economy. Read more
Barclays cut its Brent price forecasts by $8 a barrel for this year and next as it expects a large near-term crude glut due to “resilient” Russian supplies. Read more
Market participants awaited industry data on US oil inventories due later on Tuesday. Crude and gasoline inventories likely fell last week, while distillate inventories rose, a preliminary Reuters poll showed on Monday.
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Reporting by Stephanie Kelly in New York; Additional reporting by Ahmad Ghaddar in London and Muyu Xu in Singapore; Edited by Barbara Lewis, Marguerita Choy and Tomasz Janowski
Our standards: The Thomson Reuters Trust Principles.
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