(Reuters) – Oil prices slid about 2% to a 12-week low in volatile trade on Wednesday, extending the prior session’s heavy losses as investors grew more worried energy demand would take a hit in a potential global recession.
Looking ahead, analysts polled by Reuters forecast U.S. crude inventories fell about 1.0 million barrels last week. A drop in crude stockpiles could support prices. ,
The American Petroleum Institute (API), an industry group, will issue its inventory report at 4:30 p.m. EDT (2030 GMT) on Wednesday. The U.S. Energy Information Administration (EIA) reports at 11:00 a.m. EDT (1500 GMT) on Thursday. Both reports were delayed one day by the U.S. July Fourth holiday.
Brent futures for September delivery fell $2.08, or 2.0%, to settle at $100.69 a barrel. U.S. West Texas Intermediate (WTI) crude fell 97 cents, or 1.0%, to settle at $98.53. Both benchmarks closed at their lowest since April 11, in technically oversold territory for a second straight day.
U.S. diesel futures also fell over 5%.
Trade was volatile, with both crude benchmarks up over $2 a barrel early on supply concerns and down over $4 a barrel at session lows. Crude futures have been extremely volatile for months.
On Tuesday, WTI slid 8% while Brent tumbled 9%, a $10.73 drop that was the third biggest for the contract since it started trading in 1988. Its biggest drop was $16.84 in March.
Analysts at investment banks Goldman Sachs and UBS said oil prices dropped due to recession fears.
UBS cited numerous reasons, including “the unwinding of the oil trade as inflation hedge, a stronger US dollar, hedge funds reacting to negative oil price momentum, producer hedging, and new mobility restriction concerns in China.”