On Tuesday, oil prices fell to their lowest level since late March. According to the disappointing Chinese economic data, predictions of interest rates rose significantly. The US Federal Reserve and the European Central Bank (ECB) expressed concerns about sufficient supply this week.
Brent crude slid $2.41, or 3.04%, to $76.90 a barrel by 1404 GMT. Meanwhile, WTI crude in the United States fell $2.49, or 3.29%, to $73.17.
Despite news that OPEC oil output decreased in April, the market was unconcerned as Russia and Iran, both sanctioned countries, stayed abreast of ways to market their crude. Iran’s oil minister reported that the country’s daily oil output had surpassed 3M bpd, as per the oil ministry’s website SHANA.
Iran averaged 2.4M bpd in 2021 and has been under US sanctions since 2018.
For now, the Central Bank seems unpredictable in its actions, said Tamas Varga, an oil broker at PVM. Additionally, the way consuming and producing countries speak and act has created an atmosphere of uncertainty regarding the possibilities of what lies ahead.
China’s commodities experienced an unexpected drop in April
Oil prices have also fallen after the official data release on Sunday. It revealed that manufacturing activity in China, the world’s largest petroleum importer, dipped unexpectedly in April. The manufacturing purchasing managers’ index has fallen for the first time since December.
“Most sub-indicators show that this might not be a short-term aberration,” said Iris Pang, Greater China senior economist at ING, citing a weaker export market, decreased imports in March, and declining wages.
The inflation-fighting central banks predicted interest rate rises. Therefore, the investors are going to search for market direction. The dynamic might impede economic growth and reduce energy consumption.
On Wednesday, the Federal Reserve plans to raise interest rates by another 25 basis points. On the other hand, the ECB is about to boost rates at its normal policy meeting on Thursday. Meanwhile, according to a Monday poll, US crude oil stockpiles aim to fall for the third consecutive week. It will provide some support to oil prices.
The American Petroleum Institute’s findings will be sharing their official survey at 4:30 p.m. EDT (2030 GMT) on Tuesday.