On Monday. crude oil prices ticked lower as worries about an economic slowdown and fuel demand offset concerns about tight supplies.
The US West Texas Intermediate futures lowered 1.25% to $107.58 per barrel. The downturn trailed the previous slump of 6.83% to $109.56 per barrel.
Similarly, the Brent crude contracts slashed 1.39% to $112.40 per barrel. The international benchmark has also lost 5.58% to $113.12 per barrel on Friday.
Analysts explained that the downdraft came amid the widespread interest rate hikes among major central banks, led by the Federal Reserve.
Last week, the Fed uplifted its policy rate by 75 basis points to combat the surging inflation. Eventually, the Bank of England and the Swiss National Bank followed the approach.
However, the tightened monetary policies triggered fears about the risks of a recession, citing prospects of lower crude demand.
Moreover, the unexpected build in US stockpiles last week was bearish for crude prices. The Energy Information Administration reported a surplus of 1.96 million barrels, above the anticipated 1.31 million deficit.
Regardless, the latest data declined from the previous upturn of 2.03 million.
In addition, another bearish factor for crude prices is concern that China’s economy will be slow to reopen from pandemic lockdowns.
Last week, Beijing reported more than fifty coronavirus cases for the fifth day in a row. Consequently, Shanghai said it will arrange a round of mass testing every weekend until the end of July.
Crude oil to rise over tight supplies
Nevertheless, experts highlighted a possible upward trend in demand over tight supplies. In Libya, crude output dropped following blockades by groups in the country’s eastern part.
State officials reported a decline of 100,000 to 150,000 barrels per day. This drop led to a total production of 700,000 barrels per day, the smallest amount over the past year.
Furthermore, crude product exports from China, once a major producer, have continued to decline, keeping global supplies tight.
Accordingly, Beijing gasoline exports in May fell 46.00% from a year earlier, and diesel exports shed 93.00%.