Oil prices handed back a modest gain to start the shortened U.S. trading week, with crude falling on Wednesday as investors refocused on demand worries amid rising recession expectations.

Price action
  • West Texas Intermediate crude for August CL.1, -4.99% CLQ22, -4.99% fell $5.14, or 4.6%, to $104.39 a barrel, a day after gaining 1.4% to close at $109.52 a barrel. July crude, which expired at the end of Tuesday’s session, rose 1%,to settle at $110.65 a barrel on the New York Mercantile Exchange. WTI slumped over 9% last week, after seven straight weekly advances.
  • August Brent crude  BRN00, -4.42%,  the global benchmark, fell $4.94, or 4.3%, to $109.58 a barrel. The contract rose 0.5% to $114.65 a barrel on ICE Futures Europe on Tuesday.
  • Back on Nymex, July gasoline RBN22, -2.84% fell by 9 cents, or 2.2%, to $3.7086 a gallon, while July heating oil  HON22, -1.64%  fell 1.3% to $4.3004 a gallon.
  • July natural-gas futures  NGN22, -1.76% fell 1.8% to $6.882 per million British thermal units.

Read: Energy investments not enough to solve energy crisis, IEA says

What’s driving the market?

Investors were refocused on the potential for a recession in the U.S. and elsewhere that could crimp demand for energy products. As oil prices fell, U.S. equity futures also pointed to losses resuming on Wall Street where some strategists have warned that markets are not fully pricing in the possibility of an economic pullback.

“Concerns about a recession and tomorrow’s meeting between US oil industry representatives and US President Biden are being cited as the reasons for the renewed price slide,” said Carsten Fritsch, analyst at Commerzbank.

“Biden had harshly and publicly criticised refineries last week, accusing them of producing too little gasoline and taking advantage of the record-high crack spreads to pocket profits at the expense of car drivers,” he added.

As widely expected, the White House on Wednesday called on Congress to suspend the federal gas tax for three months, and asked states to provide similar relief as consumers struggle with soaring prices in the aftermath of Russia’s invasion of Ukraine in late February.

Fritsch said the problem with a gas tax moratorium is that it likely “support prices by stimulating demand for gasoline. If gasoline prices do not fall sharply in response, or dip only briefly, the oil industry is likely to face growing criticism,” he said.

The federal government charges an 18 cent tax per gallon of gasoline and a 24 cent tax per gallon of diesel, and some see any moratorium having only a modest effect on prices. If the gas savings were fully passed along to consumers, that would amount to 3.6% saved at the pump when prices are averaging about $5 a gallon nationwide, said the Associated Press.