Oil prices drop amid recession fears

NEW YORK, July 6 (Xinhua) -- Oil prices fell on Wednesday as traders worried about a possible recession.

The West Texas Intermediate for August delivery lost 97 cents, or 1 percent, to settle at 98.53 U.S. dollars a barrel on the New York Mercantile Exchange. Brent crude for September delivery decreased 2.08 dollars, or 2 percent, to close at 100.69 dollars a barrel on the London ICE Futures Exchange.

The above market reactions followed a major setback on the oil market, which saw the U.S. crude standard and Brent tumble 8.2 percent and nearly 9.5 percent, respectively, on Tuesday.

The oil selloff came as traders grew concerned that aggressive monetary tightening by the U.S. Federal Reserve and other major central banks in response to persistent inflation could push up risk of a recession, hurting energy demand.

"Fears of an abrupt weakening of economic growth have been building over the past week, and were reflected on Tuesday in an inversion of the 2-year/10-year portion of the U.S. yield curve, which has preceded recessions in the past," UBS analysts said in a note Wednesday.

Traders are anticipating data on U.S. crude stocks as the Energy Information Administration (EIA) is set to release its weekly petroleum status report on Thursday. Analysts polled by S&P Global Commodity Insights expect the EIA publication to show a fall of 1.2 million barrels in U.S. crude inventories for the week ending July 1.