Huston (The Times Groupe)- Crude oil prices were little changed on Monday amid worries over a possible recession and the prospect of higher fuel demand with the start of the U.S. driving season and Shanghai’s plans to reopen after two months of quarantines due to the Coronavirus.
Brent crude futures were up 35 cents, or 0.3%, to $112.92 a barrel by 11:24 a.m. ET (1524 GMT). U.S. West Texas Intermediate (WTI) crude was up 5 cents, or 0.05%, at $110.32.
“There are black clouds gathering around the financial markets here and it has started to impact crude oil,” said Bob Yawger, director of energy futures at Mizuho.
“The economic wellbeing of the global economy is questionable at this point,” he added.
The global economy was among the top worries of the well-heeled at Davos on Monday, with some predicting a worldwide recession because of the multiple threats.
Kristalina Georgieva, Managing Director of the International Monetary Fund, said she did not expect a recession for major economies but could not rule one out.
As the United States was set to enter its peak driving season beginning Memorial Day weekend at the end of May, losses were limited by expectations that gasoline demand would remain high.
However, analysts noted that despite concerns about rising fuel prices, mobility data from TomTom and Google had risen in recent weeks, suggesting more drivers are on the road.
The White House is considering declaring an emergency to release diesel from a rarely used stockpile to ease a supply crunch and temper rising prices, a senior administration official said.
In response to Hurricane Sandy, the White House might tap the Northeast Home Heating Oil Reserve, established in 2000 to assist with supply issues and used only once in 2012. Because the reserve only contains 1 million barrels of diesel, such a release would have limited impact.
After Russia’s invasion of Ukraine, which Moscow calls a “special operation,” the European Union hasn’t been able to reach a final deal on banning Russian oil, which has kept oil prices from climbing higher.
“The persistent squeeze in refined petroleum products in the U.S. and ever-present Ukraine/Russia risk underpinned prices,” said Jeffrey Halley, a senior market analyst at OANDA.
From June 1, Shanghai, China’s commercial hub, hopes to return to normal as the number of Coronavirus cases declines.
Chinese lockdowns, the world’s top oil importer, have slowed industrial production and construction, prompting government efforts to support the economy, including a less-than-expected mortgage rate cut on Friday.
State television quoted the cabinet as saying that China would take targeted measures, including extending its tax credit rebates and rolling out new investment projects, to support its economy.