Oil prices fell on Tuesday as the prospect of further interest rate increases and ample Russian crude flows outweighed demand recovery expectations from China.
March Brent crude futures fell by $1.01, or 1.19 per cent, to $83.89 per barrel by 0920 GMT. The March contract expires on Tuesday and the more heavily traded April contract fell by 90 cents, or 1.07 per cent, to $83.60.
Likewise, US West Texas Intermediate (WTI) crude futures dropped 92 cents, or 1.18 per cent, to $76.98 a barrel.
“Central banks and the OPEC+ producer group will be in action in the next few days. Interest rate decisions will shed some light on the prospects of economic and oil demand growth,” said Tamas Varga of oil broker PVM.
Investors expect the US Federal Reserve to raise interest rates by 25 basis points on Wednesday, with half-point increases coming from the Bank of England and European Central Bank the following day.
Higher rates could slow the global economy and weaken oil demand.
Meanwhile, a panel from members of the Organization of the Petroleum Exporting Countries (OPEC) is likely to recommend keeping the group’s current output policy unchanged when it meets on Feb. 1 at 1100 GMT, OPEC+ delegates told Reuters on Monday.
The panel, called the Joint Ministerial Monitoring Committee (JMMC), can call for a full OPEC+ meeting if warranted.
Further bearish sentiment followed news that Russia’s oil loadings from its Ust-Luga port are expected to rise at the beginning of February, despite western sanctions imposed over its invasion of Ukraine.
Price falls were cushioned by signs of potentially healthy demand coming from China, with the country’s official purchasing managers’ index (PMI), which measures manufacturing activity, rising in January from December, according to the National Bureau of Statistics (NBS).
Meanwhile, the International Monetary Fund (IMF) has raised its 2023 global growth outlook slightly due to “surprisingly resilient” demand in the United States and Europe, an easing of energy costs and the reopening of China’s economy after Beijing abandoned its strict COVID-19 restrictions.