Crude oil prices fell by more than 1% during today’s trading, Monday, May 22, 2023, amid fears of an economic recession that may limit demand.

Caution over US debt ceiling talks and concerns about demand recovery in China offset support from lower supplies from Canada and OPEC+ producers.

Moreover, by 06:55 am GMT (09:55 am Mecca time), the futures contracts for Brent crude – July 2023 delivery – fell by 1.14% to $ 74.72 a barrel.

West Texas Intermediate crude futures – for June 2023 delivery – also fell by 1.22% to record a barrel of $70.68, according to information seen by the specialized energy platform.

On Friday, May 19, crude oil prices ended in decline but achieved their first weekly gains in 5 weeks.

During the past week, Brent and West Texas Intermediate crude prices achieved gains of about 1.9% and 2.2%, respectively, recording their first weekly rise in 5 weeks.

“The United States is the largest consumer of oil in the world, and investors are also concerned that China’s recovery will falter after weak economic data reports in the past two weeks,” said VIG analyst Tony Sycamore.

Sycamore added, “If the housing market continues to decline and policymakers fail to respond, the risk of a double slowdown in China – the world’s largest importer of crude oil and the number two consumer of oil – is increasing, which portends bad news for crude oil consumption and demand”.

Last week, both crude oil benchmarks rose nearly 2%, their first weekly gain in 5 weeks, after wildfires shut down large amounts of crude oil supplies in Alberta, Canada.

Analysts from Goldman Sachs and JPMorgan said the impact of voluntary production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, known as the OPEC+ alliance, is also being felt after it took effect this month.

JPMorgan said total exports of crude oil and petroleum products from the group fell 1.7 million barrels a day by May 16, adding that Russian oil exports would likely decline by late May.

On Saturday, the Group of Seven countries pledged at their annual meeting of leaders to strengthen efforts to confront Russia’s evasion of capping prices for its oil and fuel exports “while avoiding spill over effects and preserving global energy supplies.”

The Executive Director of the International Energy Agency, Fatih Birol, said that these reinforcements are not expected to change the supply situation for crude and oil products, adding that the agency is committed to analysing it.