Investing.com – Crude oil gave up early Tuesday’s gains, falling $1 a barrel, key below $100 a barrel amid weak economic statistics after the Biden administration announced increased sales from national oil reserves to fight inflation price. possibility of recession.
WTI crude for September delivery was down $1.12, or 1.2%, at $95.58 a barrel in New York trading as of 1:50 p.m. ET (17:50 GMT).
Crude oil for October delivery fell 35 cents, or 0.4%, to $99.84 in London.
WTI hit an intraday high near $99, Brent rose above $102, before a joint announcement by the Energy Department and the White House that President Joe Biden has authorized the sale of an additional 20 million barrels of oil from the Strategic Petroleum Reserve by October , which returns it. There are plans to release 180 million barrels from reserves.
The White House said it had released about 125 million barrels from the SPR since Biden began drawing on reserves in November to offset a global oil shortage and a fuel price surge exacerbated by Russia’s invasion of Ukraine in February.
“Through these announcements, the President’s actions are having an impact as he executes unprecedented scale and scope reductions in response to energy market disruptions caused by Russian aggression,” the White House said.
As a result, the price of gasoline at the U.S. fuel pump fell to 40 cents a gallon, it said. The average price of gasoline at U.S. gas stations rose to $4.32 a gallon on Tuesday from an all-time high of $5.01 in mid-May, the AAA said.
On the economic front, June was down more than 8% from a month earlier and down by double digits from a year earlier, according to government data on Tuesday, reinforcing the notion that the housing market was weakened by soaring mortgage rates and declining consumer confidence. .
Meanwhile, the United States fell for a third straight month in July as fears of a recession intensified as the Federal Reserve raised interest rates to keep inflation at a 40-year high.
The Fed has raised rates by 1.5% in three rate hikes since March and is likely to raise rates this week with the option of three more revisions before the end of the year. Despite this increase, inflation, as measured by the consumer price index, rose by the most in 40 years. The central bank’s tolerance for inflation is only 2% per year.
“Inflation concerns — particularly rising gasoline and food prices — continue to weigh on consumers,” said Lynn Franco, senior director of economic indicators at the Conference Board, which will A grouping of public and private companies that track and publish economic statistics.
“Purchase intentions for cars, homes and major appliances all retreated further in July as the Fed raised interest rates to control inflation,” Franco said. “Looking ahead, inflation and additional rate hikes are likely to continue to pose strong headwinds to consumer spending and economic growth over the next six months.”
The Federal Reserve kept interest rates on hold for two years in a bid to bolster economic recovery after the outbreak of the coronavirus pandemic. However, the trillions of dollars in aid allocated to U.S. individuals and businesses during that time have caused prices to explode.
Now, economists say the central bank risks pushing the economy into recession if it continues on its current trajectory of raising rates. US gross domestic product has fallen by 1.6%. The Commerce Department will release preliminary estimates of second-quarter GDP on Thursday. Technically, as long as there is negative growth in the second quarter, the economy is in recession.
Market participants are also eyeing weekly U.S. oil inventories data, which will be released after the API or American Petroleum Institute market clears.
API will release a snapshot of ending balances for the week ended July 22 for U.S. crude oil, gasoline and distillates at approximately 4:30 pm ET (20:30 GMT). The numbers, which serve as a precursor to official inventory data at the same expiration date, were released Wednesday by the U.S. Energy Information Administration.
Last week, analysts tracked by Investing.com expected the EIA to report a decline of 1.04 million barrels, compared with the 446,000-barrel reduction reported for the week ended July 15.
On the positive side, the consensus is for a decrease of 857,000 barrels from the previous week’s 3.5 million barrels.
With that, an increase of 500,000 barrels is expected, compared with a deficit of 1.3 million barrels the previous week.