Oil falls as the global economy outweighs Saudi output decrease. Oil prices fell early on Tuesday as global economic fears overcame supply worries after Saudi Arabia announced its biggest output cut.
Brent crude futures fell 51 cents to $76.20 by 0506 GMT. West Texas Intermediate dropped 54 cents to $71.61.
At the weekend, Saudi Arabia, the world’s largest exporter, said that its output would decline by 1 million barrels per day (bpd) to 9 million bpd in July, sending Brent and U.S. crude prices up. However, the benchmarks ended the day with smaller gains.
“Oil prices are still in a bear market, and we can see that some advanced economies have already started to fall into recession such as Germany,” CMC Markets analyst Leon Li said.
Market investors are awaiting Wednesday’s U.S. Federal Reserve’s June rate decision and China’s May trade statistics.
Although economists expect strong energy demand, higher Fed interest rates may reduce it. The CME FedWatch Tool now predicts a 77% chance of a Fed rate pauses this month.
After recent economic data showed the U.S. and Europe are performing well, Rystad Energy research head Claudio Galimberti said demand will still drive the market.
He stated China’s traffic will recover from a new COVID-19 outbreak.
“The U.S. economy is about to show a very robust summer travel season that should mean gasoline and jet fuel demand is going to be very strong,” noted OANDA senior market analyst Edward Moya.
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