Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil Slips on Demand Jitters Ahead of U.S. CPI, OPEC Report

Published 09/12/2022, 10:09 PM
Updated 09/12/2022, 10:19 PM
© Reuters

© Reuters

By Ambar Warrick 

Investing.com-- Oil prices fell in choppy trade on Tuesday as traders feared more headwinds to demand from COVID lockdowns in China, with focus now turning to the OPEC’s monthly outlook report due later in the day. 

A series of COVID lockdowns in China, the world’s largest crude importer, have spurred a severe decline in oil imports to the country this year, threatening to turn Chinese oil demand negative.

The latest sign of trouble came as travel restrictions in several regions disrupted China’s Autumn festival celebrations, which usually spur a spike in road travel. 

London-traded Brent oil futures sank 1.3% to $92.98 a barrel, while U.S. West Texas Intermediate Futures fell nearly 1% to $86.91 a barrel by 21:55 ET (01:55 GMT). Brent futures were also set to snap a three-day gaining streak. 

Crude prices marked a strong recovery from seven-month lows hit last week, as traders bet that further tightening of supply by Russia, coupled with a European energy crisis, will boost prices later in the year.

But concerns over slowing economic activity and a strong dollar have cast doubts over sustained demand in Asian markets.

Markets were now awaiting more cues on global demand from a monthly report released by the Organization of Petroleum Exporting Countries (OPEC). The group and its allies had agreed to reduce crude production nominally last week, a move that had limited upside for prices. 

The cartel brought oil production back to pre-COVID levels for the first time in two years in 2022. But demand for crude was largely marred by slowing economic growth across the globe.

This also pulled oil prices substantially away from 14-year peaks hit during the onset of the Russia-Ukraine conflict.

Oil markets were also awaiting key U.S. CPI inflation data later on Tuesday, which is expected to show a steady, albeit limited decline in U.S. inflation from 40-year peaks hit in June. 

The reading is broadly expected to dictate the path of the dollar in the near-term, with a further decline in the greenback widely expected to be positive for crude prices.

Strength in the dollar this year, which hit a 20-year high last week, has impacted demand in major Asian importers such as India and Indonesia. A stronger dollar makes crude shipments to the country more expensive.

Latest comments

God save the Bulls
drum up fake covid so they can scramble to buy up cheap commodities before the big squeeze.
they can buy cheap commodities cuz eu dont want it
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.