© Reuters. FILE PHOTO: An oil pump jack pumps oil into a field near Calgary, Alberta, Canada on July 21, 2014. REUTERS/Todd Korol/File Photo
By Rowena Edwards
LONDON (Reuters) – Oil prices fell more than $3 on Wednesday to its lowest point since Russia invaded Ukraine on demand, fueled by looming recession risks and dismal Chinese trade data.
futures fell $3.40, or 3.66%, to $89.43 a barrel at 1338 GMT, the lowest point since Feb. 3 and below $90 a barrel for the first time since Feb. 8.
US West Texas Intermediate crude fell $3.42 or 3.94% to $83.46, reaching its lowest point since Jan. 24 as recession fears came back into the spotlight.
“The specter of a demand-depleting recession in the Western world is getting closer to reality as rising inflation and rising interest rates affect consumption,” said PVM analyst Stephen Brennock.
Credit rating agency Fitch said on Tuesday that shutting down the Nord Stream 1 pipeline has increased the likelihood of a euro-zone recession.
The European Central Bank is generally expected to raise interest rates sharply during its meeting on Thursday. A meeting of the US Federal Reserve will follow on September 21.
Weak economic data from China amid its strict zero-COVID policy has also added to demand concerns.
The country’s crude oil imports fell 9.4% in August from a year earlier, customs data showed on Wednesday.
Meanwhile, Britain’s new prime minister, Liz Truss, said on Wednesday she wanted to see more oil and gas extraction from the North Sea.
Prices were previously supported by a threat from Russian President Vladimir Putin to halt all oil and gas supplies if price caps are imposed on Russia’s energy resources.
The European Union proposed to cut off Russian gas just hours later, raising the risk of rationing in some of the world’s richest countries this winter.
Analysts already expect oil supply to be tight in the last quarter of the year.
Weekly U.S. inventory reports from the American Petroleum Institute will be released later on Wednesday, one day later than usual due to a holiday on Monday.
Inventories are expected to fall for the fourth straight week, with an estimated 733,000 barrels in the week to Sept. 2, a preliminary Reuters poll showed on Tuesday.