Oil dives 3.5% on global economy worries

Surging Covid in China disrupts factory production, weighs on demand

HOUSTON:

Oil prices tumbled 3.5% in volatile trade on Tuesday, pressured by weak demand data from China, a gloomy economic outlook and a stronger US dollar.

Brent futures for March delivery fell $3.03 to $82.88 a barrel by 16:45 GMT. US crude fell $2.81 to $77.45 per barrel. In early trade, both contracts had risen more than $1 a barrel.

“There is plenty of reason for concerns here – the China Covid-19 situation and the fear of recession in the foreseeable future is putting pressure on markets,” Mizuho analyst Robert Yawger said.

The Chinese government has raised export quotas for refined oil products in the first batch for 2023. Traders attributed the increase to expectations of poor domestic demand as the world’s largest crude importer continues to battle waves of Covid-19 infections.

There was another worry as China’s factory activity shrank in December as surging infections disrupted production and weighed on demand.

Published in The Express Tribune, January 4^th, 2023.

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