Oil prices fall on fears of recession, weak consumption
TOKYO Reuters -- Oil prices fell in early trade on Tuesday because concerns over a possible recession and weaker consumption outweighed expectations of tight global supply and a boost to fuel demand in China after Beijing promised to stimulate the economy.
Brent crude futures fell 35 cents, or 0.3%, to $113.07 a barrel by the end of July. U.S. West Texas Intermediate WTI crude futures for July delivery dropped 36 cents, or 0.3%, to $109.93 a barrel. Both benchmarks fell by more than $1 earlier in the session.
On Monday, Brent fell by 0.7%, while the WTI was nearly flat.
Multiple threats to the global economy rang the worries of the world's well-heeled at the annual Davos economic summit, with some flagging the risk of a global recession.
International Monetary Fund Managing Director KristalinaGeorgieva said she did not expect a recession for majoreconomies but could not rule one out.
Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd, said investors were selling off as they expected higher oil prices to dent consumption for fuels worldwide.
He believes that Brent will stay within a boxed range of $105 - $115 a barrel for a while because of concerns over tight global supply and hopes for demand recovery in China.
The head of Saudi Aramco told Reuters the world is facing an oil supply crunch, with most companies afraid to invest in the sector due to green energy pressures.
The cabinet said on Monday that China, the world's top oil importer, will expand its tax credit rebates, postpone social security payments and loan repayments, roll out new investment projects and take other steps to support the economy.
As its coronaviruses caseload declines, the commercial hub of Shanghai aims to normalise life from June 1, but rising new COVID 19 cases in Beijing raised concerns for further curbs.
According to Germany, the European Union will likely agree an embargo on Russian oil imports within a few days, as Moscow said it saw its economic ties with China after being isolated by the West over its invasion of Ukraine.