Oil Edges Down on US Recession Risk

A oil pump is seen at sunset outside Scheibenhard, near Strasbourg, France, October 6, 2017. REUTERS/Christian Hartmann/File Photo
A oil pump is seen at sunset outside Scheibenhard, near Strasbourg, France, October 6, 2017. REUTERS/Christian Hartmann/File Photo
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Oil Edges Down on US Recession Risk

A oil pump is seen at sunset outside Scheibenhard, near Strasbourg, France, October 6, 2017. REUTERS/Christian Hartmann/File Photo
A oil pump is seen at sunset outside Scheibenhard, near Strasbourg, France, October 6, 2017. REUTERS/Christian Hartmann/File Photo

Oil prices slipped on Thursday as the prospect of a possible recession in the United States, the world's largest oil consumer, offset concerns of tight supply.

Brent crude fell 55 cents, or 0.63%, to $86.78 a barrel by 1352 GMT. US West Texas Intermediate (WTI) slipped 46 cents, or 0.55%, to $82.80.

Both Brent and WTI had risen 2% on Wednesday to their highest in more than a month as cooling US inflation spurred hopes that the US Federal Reserve will stop raising interest rates.

However, minutes from the Fed's last policy meeting indicated that banking sector stress could tip the economy into recession, which would weaken US oil demand.

The Organization of the Petroleum Exporting Countries (OPEC) flagged downside risks to summer oil demand in a monthly report on Thursday. But OPEC kept its forecast for global oil demand growth in 2023 unchanged.

The market is a keeping a close eye on indicators of economic growth, which Tamas Varga of oil broker PVM described as fragile. "Inflationary pressure could easily become elevated again," Varga said.

The market is still reeling from the shock decision by OPEC and its allies, together known as OPEC+, to cut output further.

The executive director of the International Energy Agency expects the move to tighten supply in the second half of the year and push oil prices higher, Reuters reported.

However, the International Monetary Fund on Tuesday highlighted the risk this poses to global economic expansion.

For every 10% rise in the price of oil, IMF models show a 0.1 percentage point reduction in growth and a 0.3 percentage point increase in inflation, IMF chief economist Pierre-Olivier Gourinchas said.

Markets on Wednesday shrugged off a small build in US crude oil stocks, attributing it in part to a release of oil from the US emergency reserve and lower exports at the start of the month.

The Biden administration plans to refill the US Strategic Petroleum Reserve soon and hopes to do it at lower oil prices, US Energy Secretary Jennifer Granholm said on Wednesday.



Saudi PIF Completes $7 bln Inaugural Murabaha Credit Facility

The Public Investment Fund (PIF) logo
The Public Investment Fund (PIF) logo
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Saudi PIF Completes $7 bln Inaugural Murabaha Credit Facility

The Public Investment Fund (PIF) logo
The Public Investment Fund (PIF) logo

Saudi Arabia's Public Investment Fund (PIF) completed on Monday a $7 billion inaugural murabaha credit facility.
In a statement, PIF said the credit facility is supported by a syndicate of 20 international and regional financial institutions.
PIF head of the Global Capital Finance Division and head of Investment Strategy and Economic Insights Division Fahad AlSaif said: “This inaugural murabaha credit facility demonstrates the flexibility and depth of PIF’s financing strategy and use of diversified funding sources, as we continue to drive transformative investments, globally and in Saudi Arabia”, the Saudi Press Agency reported on Monday.
This financing complements PIF’s successful sukuk issuances over the past two years, the statement added. It also underpins PIF’s strong financial position, as well as its best-practice approach to debt financing.
PIF is rated Aa3 by Moody’s with stable outlook and A+ by Fitch with stable outlook. PIF has four main sources of funding: capital injections from government, government asset transfers, retained earnings from investments, and loans and debt instruments.