(Reuters) – Oil prices settled lower on Tuesday, amid concerns of an increase in US supply, along with an economic slowdown and a drop in Chinese demand for fuel.
Brent crude futures closed down $1.59, or 1.7%, at $90.03 a barrel, while US West Texas Intermediate crude closed down $2.64, or 3.1%, at $82.82 a barrel.
China, the world’s largest importer of crude oil, has indefinitely postponed the release of economic indicators that were due to be published on Tuesday, signaling to the market that demand for the fuel is significantly lower in the region. Read more
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“It’s not a good sign that China has decided not to release economic numbers,” said John Kilduff, partner at Again Capital LLC in New York.
CMC Markets analyst Tina Teng said China’s commitment to its COVID-free policy continued to raise doubts about the country’s economic growth.
Oil prices were also pressured by reports that the US government will continue to release crude oil from reserves.
Sources told Reuters on Monday that the Biden administration plans to sell oil from the Strategic Petroleum Reserve in a bid to cool fuel prices ahead of next month’s congressional elections.
In addition, a preliminary Reuters poll on Monday showed that US crude oil inventories are expected to rise for the second week in a row.
The Energy Information Administration said production in the Permian Basin of Texas and New Mexico, the largest US shale oil basin, is expected to rise by about 50,000 barrels per day to a record 5.453 million barrels per day this month.
ANZ Research analysts said in a note that investors were increasing their long positions in futures contracts after OPEC+ agreed to cut production by 2 million barrels per day.
Several members of the oil production group supported the cut after the White House accused Saudi Arabia of forcing some countries to support the move, a charge Riyadh denies.
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Additional reporting by Rowena Edwards in London and Isabel Qua in Singapore Editing by David Goodman, Ed Osmond, Nick McPhee and David Gregorio
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