Oil prices slump amid concerns over potential recession
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JUN
22

Oil prices slump amid concerns over potential recession

Oil prices slump amid concerns over potential recession

Oil prices tumbled on Wednesday on news of a plan by U.S. President Joe Biden to cut fuel costs for drivers and amid concerns over a potential economic recession after recent central bank rate hikes, which also weighed on equities.


Biden on Wednesday is expected to ask Congress to consider a three-month suspension of the 18.4 cents per gallon federal tax on gasoline and call on states to suspend their fuel taxes, a senior administration official said. Commerzbank’s commodities analyst Carsten Fritsch said, if successful, the tax cut would likely “support prices by stimulating demand for gasoline.”


PVM analyst Stephen Brennock said that while lower consumer prices could be seen as a bullish demand signal, a tax cut could also induce expectations of further measures by the Biden administration to cool rallying energy prices.


The White House asked the CEOs of seven oil companies to a meeting this week to discuss ways to increase production capacity and reduce fuel prices of around $5 a gallon as they make record profits. Chevron (CVX.N) CEO Michael Wirth said criticising the oil industry was not the way to bring down fuel prices and that the government had to change its approach.

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