Pump jacks work at sunset in an oil field in Midland, Texas, U.S., August 22, 2018. REUTERS/Nick Oxford

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  • Brent and WTI slide above $1/bbl
  • Recession fears, China COVID restrictions weigh on oil – analysts
  • Supply issues also ease after Russian court overturns decision to suspend Caspian pipeline operations

SINGAPORE, July 12 (Reuters) – Oil prices fell on Tuesday as fresh COVID-19 curbs in China, the world’s top crude importer, and fears of a global economic slowdown weighed on demand prospects. fuel.

Brent futures for September fell $1.35, or 1.3%, to $105.75 a barrel at 0305 GMT, while US West Texas Intermediate crude for August delivery was at 102, $64 a barrel, down $1.45, or 1.4%.

“Growing fears of a recession and continued weak demand in China are driving down oil prices, although current supply and demand balances remain precarious,” said analysts at consultancy Eurasia Group. in a note.

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Several Chinese cities are adopting new COVID-19 restrictions, from business shutdowns to closures, to curb new infections as the highly infectious BA.5.2.1 subvariant has been detected in the country. Read more

“While China may take a more targeted approach to trying to crush any outbreak, we’ll have to see how that plays out given the country’s zero COVID policy,” said Warren Patterson, head of commodities research. at ING.

“Overall, demand concerns continue to drive price action. However, the fundamentals are constructive given the tight supply situation which is expected to continue at least through the end of the month. year. As a result, we expect the price decline to be limited.”

Western sanctions against Russia over the war in Ukraine, which Russia calls a “special military operation”, have disrupted crude and fuel trade flows.

There have also been other cuts to energy supply routes from Russia, a major supplier of oil, fuel and natural gas to Europe, which have traders and utilities on edge.

Concerns about a disruption to the Caspian Pipeline Consortium (CPC) system eased after a Russian court on Monday overturned an earlier ruling suspending pipeline operations for 30 days.

However, traders and analysts still fear Russia will suspend the pipeline, which carries oil from Kazakhstan to the Black Sea, potentially disrupting 1% of the world’s crude supply. Read more

Additionally, spare capacity in the Organization of the Petroleum Exporting Countries is being depleted, with most producers pumping at maximum capacity.

US President Joe Biden will advocate for more OPEC oil production when he meets with Gulf leaders in Saudi Arabia this week, White House national security adviser Jake Sullivan said on Monday. . Read more

“Saudi Arabia is not expected to add significant volumes in the near term, despite President Joe Biden’s impending visit, as Riyadh will prioritize its commitment to market management and maintaining spare capacity for losses. emergency,” Eurasia analysts said.

In the United States, crude and gasoline inventories fell last week, while distillate inventories likely rose, a preliminary Reuters poll showed on Monday.

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Reporting by Florence Tan in Singapore, additional reporting by Emily Chow in Kuala Lumpur; Editing by Christian Schmollinger

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