Oil falls $2/bbl on recession fears, swelling US fuel stocks                                                         

The price of crude oil has fallen by $2 per barrel due to growing concerns about a potential global economic recession and swelling stocks of fuel in the United States.

The decline is due to increasing fears that the ongoing trade dispute between the United States and China, coupled with slowing growth in major economies such as Germany and stubbornly low inflation rates, could push the world towards a recession.

In addition, the latest data from the United States Energy Information Administration (EIA) showed that there was a larger than expected increase in stocks of gasoline and distillates, which includes diesel and heating oil, in the US last week. The report also showed that crude oil inventories were higher than anticipated.

These factors have led to concerns that demand for oil could weaken, leading to a surplus of supply and putting further downward pressure on prices.

The price of Brent crude, the global benchmark, fell by $2.17, or 3.5%, to $59.81 a barrel by midday London time on Wednesday, while US West Texas Intermediate crude declined by $1.74, or 3.2%, to $55.00 a barrel.

The decline is likely to be seen as a blow to major oil producers, such as Saudi Arabia, who have cut production to support prices. The market has already been hit by concerns about slowing economic growth and weak global demand, which has led to a drop in prices of around 20% since April.

However, analysts have suggested that the latest price drop could be short-lived, with some predicting a rebound by the end of the year if US-China trade talks progress positively and if OPEC+ producers continue to cooperate on output cuts.

Oil costs dropped by $2 per barrel on Wednesday, February fifth, essentially determined by fears of a worldwide downturn and a critical expansion in US fuel stocks. The spread of the Covid in China and different regions of the planet brought about a decrease popular for oil, which pushed costs lower. Also, the US Energy Data Organization (EIA) revealed that unrefined inventories flooded by 3.4 million barrels in the week finished January 31st, well over the assessed figure of 2.8 million barrels. 

The ascent in oil inventories was primarily because of an expansion in imports, which saw the figure ascend by 1 million barrels each day. The development in stocks was likewise ascribed to bring down processing plant action because of upkeep, bringing about less unrefined petroleum inputs. Besides, gas inventories were up by 740,000 barrels, while distillate energizes, including diesel and warming oil, expanded by 1.5 million barrels. The additional inventories brought about an overabundance on the lookout, further adding to the falling costs.

* oil falls 2  bbl dollars