(Bloomberg) -- Oil sank again as concerns over a slowdown swept through global commodity markets and US industry estimates showed rising stockpiles.
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West Texas Intermediate sank below $97 a barrel, taking losses for the US benchmark to almost 11% so far this week. Escalating concern that a looming recession will erode energy consumption has driven prices lower even as the market continues to show signs that crude supplies remain tight at present.
Oil's sudden retreat means the world's most crucial commodity has given up most of the gains seen in the wake of Russia's invasion of Ukraine, which lifted the US benchmark above $130 a barrel in March. Surging inflationary pressures have prompted the Federal Reserve to tighten policy aggressively, which in turn spurred expectations that a demand-sapping recession may lie ahead. The dynamic has for now overshadowed concerns over supply tightness.
"There isn't much rational assessment going on -- it's panic selling," said Vandana Hari, founder of Vanda Insights in Singapore. "The fears may not end but could get brushed aside when supply constraints are back to the fore. The market balance is tight."
The industry-funded American Petroleum Institute reported US crude stockpiles expanded by about 3.8 million barrels last week, including a rise at the key storage hub at Cushing, Oklahoma, according to people familiar with the widely-watched figures. Official data on holdings will follow later on Thursday.
Oil markets remain in backwardation, a bullish pattern with near-term prices above longer-dated ones. Brent's prompt spread -- the gap between its two nearest contracts -- was $3.55 a barrel, up from $2.43 a barrel a month ago.
The US and its allies, meanwhile, have discussed trying to cap the price of Russian oil between $40 and about $60 a barrel, according to people familiar with the matter. Allies have been exploring several ways to limit Russia's oil revenues while minimizing the impact on their own economies.
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