Oil prices fell as recession concerns and worsening COVID-19 outbreaks in China sparked fears of lower fuel demand, outweighing supply worries. | Reuters
COVID cases sharply escalated in Guangzhou and other major Chinese cities, official data showed on Tuesday. The global manufacturing hub is fighting its worst flare-up ever, testing its ability to avoid a Shanghai-style citywide lockdown.
A firmer greenback also weighed on oil prices. Oil is generally priced in U.S. dollars, so a stronger greenback makes the commodity more expensive to holders of other currencies. “On the back of sticky inflation and rising interest rates in major western countries, oil futures are still pricing in the possibility of a global economic recession,” said Teng.
But the near-term fundamentals for oil remain bullish, with the focus returning to supply issues, ANZ Research analysts said.“The market is facing the deadline for European imports of Russian oil before sanctions kick in,” ANZ added.