Crude oil lower on global demand worries; API inventories due

Investing.com — Oil prices drifted lower Tuesday, continuing the previous session’s losses on fears of a global economic slowdown hitting demand for crude in the second half of the year.

By 09:00 ET (13:00 GMT), futures traded 1% lower at $74.90 a barrel, while the contract fell 0.9% to $78.60 a barrel. 

Crude prices have continued to edge lower Tuesday after both benchmarks dropped more than 1% on Monday in the wake of Sunday’s data showing that activity in China’s important manufacturing sector slipped into contraction territory.

This was the first contraction in the since December, when the world’s largest crude importer started lifting its oppressive COVID-19 mobility restrictions.

The disappointing economic news continued Tuesday, as similar data showed that eurozone contracted further last month while the final U.K. fell to a three-month low of 47.8 in April.

On top of this, expected interest rate hikes this week by a number of central banks are likely to further dent economic growth, weighing on demand for oil.

The started the ball rolling with a surprise hike earlier Tuesday, and both the and the are expected to follow suit in the coming days.

Turning to the supply side, Russia’s exports jumped back above 4 million barrels a day in the week to April 28, according to data compiled by Bloomberg.

This is a level that has only been achieved once before since Russia invaded Ukraine, and suggests that Moscow’s threatened oil output cut has yet to be carried out as there is no sign of a sustained drop in crude flows out of the country.

This puts the focus back onto the Organization of the Petroleum Exporting Countries, as their voluntary output cuts of just over 1 million barrels per day, which are taking effect in May, have not been enough to combat the perception of falling demand.

Elsewhere, data from the industry body are due later in the session, and are expected to show another fall in U.S. crude inventories, dropping for a third consecutive week.

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