Oil falls on concerns of faltering economic growth to hit demand
Brent crude futures fell 24 cents, or 0.2%, to $83.18 a barrel at 0830 GMT. U.S. West Texas Intermediate (WTI) crude futures fell 23 cents or 0.2% to $80.41 a barrel.
Both contracts pared losses after falling as much as 70 cents earlier when China, the world’s biggest crude importer, released data showing September imports fell 15% from a year earlier.
However, China, along with Europe and India, remains mired in coal and natural gas shortages that have pushed up prices for electricity generation fuels.
“These are troubling times for China. A severe energy crisis is gripping the country,” said Stephen Brennock of broker PVM.
“The current price point will act as a drag on its foreign crude purchases while simultaneously incentivising a further drawdown in domestic oil stocks.”
Meanwhile, the International Monetary Fund on Tuesday cut its growth outlook for the United States and other major economies on worries supply chain disruptions and cost pressures are holding back a global economic recovery from the coronavirus pandemic.
A strong U.S. dollar, trading near a one-year high, also weighed on oil prices, as it makes oil more expensive for those holding other currencies.
However, oil watchers are still focused on whether soaring gas and coal prices will lead to more demand for oil products for power generation.
“There are growing expectations that the high prices for gas and thermal coal are likely to boost demand for alternative fuels such as diesel and fuel oil,” ANZ Research analysts said in a note.