Home Business Oil falls over 2% on global recession and China COVID-19 fears

Oil falls over 2% on global recession and China COVID-19 fears

Oil prices fall as dollar strengthens, China’s COVID-19 sanctions dampen demand

Oil fell more than 2 per cent on Tuesday, losing nearly 2 per cent in the previous session, as fears of a recession and a rise in COVID-19 cases in China raised concerns over global demand.

World Bank President David Malpass and International Monetary Fund Managing Director Kristalina Georgieva on Monday warned of the growing threat of a global recession and said inflation remains a persistent problem.

Brent crude fell $2.30, or 2.4 percent, to $93.89 a barrel. US West Texas Intermediate crude fell $2.12, or 2.3 percent, to $89.01.

“There is now growing pessimism in the markets,” said Craig Erlam of brokerage OANDA.

Oil has fallen sharply on economic fears since the first surge in 2022, when Brent neared its record high of $147 as Russia’s invasion of Ukraine added to supply concerns.

“There are warnings being issued when it comes to global economic growth,” said AvaTrade analyst Naeem Aslam.

Those concerns aside, fears of a further impact on demand in China were also weighed on. Authorities have ramped up coronavirus testing in Shanghai and other major cities as COVID-19 infections spiked again.

Oil also came under pressure from a stronger dollar, which rose to multi-year highs on rising interest rates and worries about the escalation of the Ukraine war.

A stronger dollar makes oil more expensive for buyers with other currencies and reduces risk appetite.

However, losses were limited by a tight market and last week’s decision by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, to lower its production target by 2 million barrels per day. For.

“Next year is still in short supply as production cuts as per OPEC+ decision are due to come into force by the end of 2023,” a report by Commerzbank said.

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