Oil prices deepened their losses by more than 4% during trading on Tuesday, with fears of slowing demand for crude, and the rise of the dollar to its highest level in two years.
The International Monetary Fund cut its forecast for global economic growth this year to 3.6%, down by 0.8% from previous expectations, warning of the repercussions of the war in Ukraine.
The drop in crude prices comes despite investors being worried about tight global supplies, after Libya halted some exports, and as factories in Shanghai prepared to reopen after the COVID-19 shutdown, easing some demand concerns.
Oil Prices Today
Brent crude futures prices for June delivery fell 4%, to $108.40 a barrel, after rising to $114.21 earlier in the session.
The prices of West Texas Intermediate crude futures – May delivery – also fell by 3.5%, to $ 103.73 a barrel, after rising to $ 108.92 earlier.
The two benchmark crudes rose more than 1% during trading yesterday, Monday, after reaching their highest levels since March 28, due to the political crisis in Libya, after the National Oil Corporation announced that it could not transport oil from its largest oil fields and closed another field due to political protests. .
The Libyan National Oil Corporation also announced today, the state of force majeure in the Brega oil port, with the inability to fulfill its obligations towards the market and the oil sector in Libya.
Demand In China
The latest supply hit came as demand for fuel in China – the world’s largest oil importer – was expected to rise as manufacturing plants prepared to reopen in Shanghai.
However, oil prices remain vulnerable to demand shocks, as China continues to impose severe restrictions linked to the Corona virus.
“For oil prices to launch on a sustainable path, reopening mainland cities is essential to translate it into a sustainable economic recovery that supports oil demand,” said Stephen Innes, managing director of SBI Asset Management.
Analyst Jeffrey Haley noted that markets in Asia seemed complacent about adopting a wait-and-see approach, reluctant to chase higher prices, adding that growth concerns in China were capping gains.
US Oil Stocks
A preliminary Reuters poll showed that oil stocks in the United States rose 9.4 million barrels in the week ending April 8 to 421.8 million barrels, against analysts’ hopes for an increase of 863,000 barrels.
And the possibility of an EU embargo on Russian oil to invade Ukraine continues to keep the market on alert.
Russian forces launched their expected offensive in eastern Ukraine, trying to push back defenses along almost the entire front line, in what Ukrainian officials have described as the second phase of the war.