Oil prices fell by more than 3% in volatile trade on Tuesday on fears of higher U.S. supply amid an economic slowdown and lower Chinese fuel demand.
Brent crude futures fell by $2.37, or 3.6%, to $89.25 a barrel by 12:29 p.m. EDT (1629 GMT).
U.S. West Texas Intermediate (WTI) crude futures were down $3.12, or 3.7%, at $82.34, having risen by over $1 earlier in the session.
China, the world’s top crude oil importer, indefinitely delayed release of economic indicators originally scheduled to be published on Tuesday, indicating to the market that fuel demand is significantly depressed in the region.
“It’s not a good sign when China decides not to publish economic figures,” said John Kilduff, partner at Again Capital LLC in New York.
China’s adherence to its zero-COVID policy has continued to increase uncertainties about the country’s economic growth, CMC Markets analyst Tina Teng said.
Oil prices were also pressured by reports that the U.S. government would continue releasing crude oil from reserves.
Oil steady as positive Chinese signals counter recession fears
The Biden administration plans to sell oil from the Strategic Petroleum Reserve in an effort to cool fuel prices before next month’s congressional elections, sources told Reuters on Monday.
In addition, U.S. crude oil stocks were expected to have risen for a second consecutive week, a preliminary Reuters poll showed on Monday.
Output in the Permian Basin of Texas and New Mexico, the biggest U.S. shale oil basin, is forecast to rise by about 50,000 barrels per day (bpd) to a record 5.453 million bpd this month, the Energy Information Administration said.
Investors had been increasing long positions in futures after OPEC+ agreed to lower output by 2 million barrels per day, ANZ Research analysts said in a note.
Several members of the oil producer group have endorsed the cut after the White House accused Saudi Arabia of coercing some nations into supporting the move, a charge Riyadh denies.
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