SINGAPORE – Oil prices fell on Tuesday amid concerns over a possible recession and China’s Kovid-19 ban, surpassing expectations of tougher global supplies and rising fuel demand during the US summer driving season.
Brent crude futures for July fell 61 cents, or 0.5%, to 2 112.81 a barrel by 0402 GMT. US West Texas Intermediate (WTI) crude futures for July delivery fell 55 cents, or 0.5%, to 10 109.74 a barrel. Both benchmarks dropped more than 1 before the session.
Brent rose 0.7% on Monday while WTI almost settled flat.
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Kristalina Georgieva, managing director of the International Monetary Fund, said she did not expect a recession for the major economies but could not blow one up.
Toshitaka Tazawa, an analyst at Fujitomi Securities Company Limited, said: “Investors are selling because they expect to reduce global energy costs.
The rise of the new COVID-19 case in Beijing has raised concerns for further control, as Shanghai, China’s commercial hub, aims to normalize life from June 1 as coronavirus caseloads decrease.
The Chinese capital on Sunday identified 99 new cases, 61 more than the previous day – the largest daily number ever since the one-month-old outbreak saw dozens of new infections every day in a row.
“China’s cowardly lockdowns are certainly playing a significant role, focusing on the outlook for energy and energy demand, with Beijing reporting increasingly positive cases, making investors worried about expanding lockdowns to business centers other than Shanghai,” said Tina Teng, a CMS Markets analyst.
Losses were limited by the expectation that demand for gasoline would remain high.
The United States is set to enter its maximum driving season starting this weekend at Memorial Day Weekend.
A ban on Russian oil imports is likely to be agreed “within days” by the European Union, according to its largest member Germany, as Moscow says it has boosted its economic ties with China since it was cut off by the West over its invasion of Ukraine.
Faced with the global oil supply crisis, most companies are afraid to invest in the sector as they face green energy pressures, the head of Saudi Aramco told Reuters, adding that it could not expand production capacity faster than promised.
(Reporting by Yuka Obayashi and Isabel Wells; Editing by Stephen Coates)