Oil Opens Week Lower as Traders Monitor G-7, Recession Concerns

Oil slipped at the start of the week as investors monitored developments from the gathering of Group of Seven leaders, while fears of a demand-sapping recession continue to hang over the market.

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(Bloomberg) — Oil slipped at the start of the week as investors monitored developments from the gathering of Group of Seven leaders, while fears of a demand-sapping recession continue to hang over the market.

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West Texas Intermediate fell below $107 a barrel in early trading Monday. The benchmark rose 3.2% on Friday but still posted its first back-to-back weekly loss since April. The G-7 will commit to providing indefinite support to Ukraine for its defense, and is weighing a price cap on Russian oil. 

Oil is set for its first monthly decline since November on escalating fears about a global slowdown as central banks raise interest rates to try and tame surging inflation. US gasoline prices haven’t tracked the rapid plunge in crude prices recently, with the national average holding near $5 a gallon.

While crude has been swept up in the turmoil along with other commodities, the oil market is flashing bullish signs that indicate losses could be capped. Global stockpiles remain tight — exacerbated by Russia’s invasion of Ukraine — and timespreads for futures contracts are signaling scarce supply.

Discussions among G-7 leaders and officials about a price cap on Russian oil are ongoing and an agreement has yet to be reached, according to people familiar with the matter. The potential mechanism would work by imposing restrictions on insurance and shipping, they said.

The market was deprived its weekly snapshot on US stockpiles and demand last week after a power disruption delayed the release of figures from the Energy Information Administration. The agency needed to replace damaged equipment and expects to provide an update on the situation on Monday.