Oil prices extended their losses yesterday, after plunging 5% in the previous session, as investors worried about the health of the global economy, notably in the United States and China.
Brent crude futures fell below $74 a barrel mid-quote, while West Texas Intermediate (WTI) crude slipped to $70. Both benchmarks closed at their lowest level since late March in the previous session, when they also posted their largest one-day percentage declines since early January.
Analysts say oil prices are being impacted by concerns about the health of the US banking sector and disappointing US jobs data, which is heading for a recession.
Regulators seized First Republic Bank (FRC.N) and sold most of its assets to JPMorgan Chase & Co (JPM.N) on Monday, as part of a deal to resolve the largest U.S. bank failure since the financial crisis of 2008, and to draw a line under the persistent banking turmoil.
In Australia, the central bank surprised markets by raising its key rate on Tuesday and warned that further tightening may be needed to tackle high inflation, Reuters reported.
Energy prices are also under pressure after data out of China over the weekend showed manufacturing activity unexpectedly fell in April. China is the world’s largest consumer of energy and the largest buyer of crude oil.
The reopening of the Chinese economy will be crucial for Asia, the International Monetary Fund (IMF) said, raising its economic forecast for the region on Tuesday. But he warned of the risks associated with persistent inflation and volatility in global markets due to difficulties in the Western banking sector.
In this context, a Reuters survey revealed that OPEC oil production fell by 190,000 barrels per day in April, mainly due to Iraq and Nigeria. Production is expected to fall further in May with the entry into force of a new series of voluntary reductions unveiled on April 2.
2023-05-04 09:06:26
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