Oil slips to seven-month low on economic woes

An oil pump jack pumps oil in a field near Calgary, Alberta, Canada, July 21, 2014. REUTERS/Todd Korol/File Photo

LONDON, Sept 7 (Reuters) – Oil prices fell more than $3 on Wednesday to their lowest level since Russia invaded Ukraine on demand fears fueled by looming recession risks and disappointing Chinese trade data.

Brent crude futures were down $3.40, or 3.66%, at $89.43 a barrel at 1338 GMT, touching their lowest since February 3 and falling below $90 on barrel for the first time since February 8.

U.S. West Texas Intermediate crude fell $3.42, or 3.94%, to $83.46, hitting its lowest level since Jan. 24 as recession fears returned to center stage.

“The specter of a recession that will sap demand in the Western world is about to become reality as soaring inflation and rising interest rates weigh on consumption,” said analyst Stephen Brennock. at PVM.

The rating agency Fitch said on Tuesday that the shutdown of the Nord Stream 1 gas pipeline had increased the likelihood of a recession in the euro zone.

The European Central Bank is expected to raise interest rates sharply at its meeting on Thursday. A US Federal Reserve meeting will follow on September 21. read more

Weak economic data from China under its strict zero COVID policy has also heightened demand concerns. Read more

The country’s crude oil imports in August fell 9.4% from a year earlier, customs data showed on Wednesday. Read more

Meanwhile, Britain’s new Prime Minister Liz Truss said on Wednesday she wanted to see more oil and gas extraction from the North Sea. Read more

Prices had been buoyed earlier by a threat from Russian President Vladimir Putin to halt all oil and gas supplies if price caps were imposed on Russia’s energy resources.

The European Union offered to cap Russian gas hours later, raising the risk of rationing in some of the world’s wealthiest countries this winter. Read more

Analysts already expect oil supply to be tight in the last quarter of the year.

The American Petroleum Institute’s weekly U.S. inventory reports will be released later Wednesday, a day later than usual due to a Monday holiday.

U.S. crude inventories are expected to have fallen for the fourth consecutive week, falling by about 733,000 barrels in the week to Sept. 2, a preliminary Reuters poll showed on Tuesday.

Reporting by Rowena Edwards Additional reporting by Isabel Kua in Singapore Editing by Jan Harvey and David Goodman

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