HOUSTON: Crude oil prices fell on Tuesday amid concerns about a slowing global economy and the expectation of an increase in US oil inventories.
Brent crude futures for March delivery fell $1.15 to $87.04 a barrel, a loss of 1.3 percent by 11:11 a.m. EDT (1611 GMT). US crude fell 96 cents, or 1.2 percent, to $80.66 a barrel.
Business activity contracted in the United States in January for the seventh month in a row, although the contraction moderated in the manufacturing and services sectors for the first time since September and business confidence was boosted as the new year began.
The US economy “can still roll over and some energy traders remain skeptical about how quickly Chinese demand for crude oil will bounce back this quarter,” OANDA analyst Edward Moya said in a note.
The S&P Global Composite PMI showed that business activity in the Eurozone made a surprising return to modest growth in January. However, British private sector economic activity fell at its fastest rate in two years.
A preliminary Reuters poll showed on Monday that US inventories of crude oil are expected to rise by about one million last week, while distillate inventories were expected to decline.
Meanwhile, five OPEC+ sources said on Tuesday that the OPEC+ committee is likely to endorse the producer group’s current oil production policy when it meets next week, as hopes for higher Chinese demand driving higher oil prices are balanced by concerns about inflation and the global economy. . Slower
JPMorgan raised its forecast for demand for Chinese crude but maintained its 2023 average price forecast at $90 a barrel for Brent crude.
“In the absence of any major geopolitical events, it will be difficult for oil prices to breach $100 in 2023 as there will be more supply than demand this year,” she said in an analyst note.
Crude oil prices in physical markets started the year with a surge in increased buying from China after the easing of pandemic restrictions and due to traders’ concerns that sanctions imposed on Russia could lead to a tightening of supplies.
US oilfield services company Halliburton said its equipment for fracking shale oil wells is still fully booked with higher oil prices in drilling operations.
Investors also returned to oil futures and options at the fastest rate in more than two years as concerns about a downturn in the global business cycle eased.