Oil falls below US$90 for first time since war as demand slows

Oil extended declines to the lowest in almost six months as weaker U.S. gasoline demand and recessionary fears weighed on markets.

West Texas Intermediate fell as much as 3.2 per cent to US$87.78 a barrel, a level last seen in the weeks leading up to Russia’s invasion of Ukraine. This week’s descent was touched off by government data showing Americans are driving less than they did in the summer of 2020. Fears of an economic slowdown have intensified along with the potential impacts on crude demand.

Prices falling below US$90 a barrel “is quite remarkable given how tight the market remains and how little scope there is to relieve that,” said Craig Erlam, senior market analyst at Oanda. “But recession talk is getting louder and should it become reality, it will likely address some of the imbalance. Just not in the way we’d like.”