Oil drops on recession fears and China COVID curbs | Reuters

Oil drops on recession fears and China COVID curbs | Reuters

Oil fell by almost $1 on Tuesday as concerns over a possible recession and China's COVID-19 curbs outweighed tight global supply and expectations of a pick-up in fuel demand with the U.S. summer driving season.

Investment banks including UBS and Goldman Sachs have cut their 2022 China growth outlooks. The head of the International Monetary Fund, meanwhile, said she does not expect a recession for major economies but cannot rule it out.

"Downgraded China GDP growth forecasts and increasing worries about wider virus restrictions in Beijing have pushed oil prices lower," said Jeffrey Halley, analyst at brokerage OANDA.

Brent crude fell 56 cents, or 0.5%, to $112.86 a barrel by 0815 GMT. U.S. West Texas Intermediate (WTI) crude dropped 72 cents, or 0.7%, to $109.57.

"Global economic growth is precipitously declining under the collective impact of rising interest rates, Chinese COVID flare-ups and the European war," said Tamas Varga of oil broker PVM.