Crude oil prices down by 5% in volatile trading on Tuesday as investors weighed demand concerns against tight international supplies after Libya halted some exports and as factories in Shanghai prepared to reopen following a Covid-19 shutdown.
Growing fears of a U.S. recession as the Federal Reserve tries to beat inflation with some of the most aggressive rate hikes in history also reduced sentiment in raw materials, which had seen huge price swings lately as investors tried to balance costs with what people could afford to pay.
Brent, the London-traded global benchmark for crude was down $1.41, or 1.2 per cent, to $111.75 a barrel, after rising more than $1 to $114.21 earlier in the session. U.S. West Texas Intermediate, the benchmark for U.S. crude fell $1.64, or 1.5 per cent, to $106.57 a barrel, after rising to $108.92 earlier.
The two crude benchmarks had moved up about 15% over four previous sessions of trading, rallying on expectations of a greater supply squeeze in Europe as Western countries think about the possibility of a full import ban of Russian oil and gas to add to Moscow’s punishment over its role in the Ukraine crisis.
U.S. crude oil inventories likely high in last week, while distill and gasoline stockpiles were seen down, a preliminary Reuters poll showed on Monday. The price slipped on Tuesday followed a rose of more than 1 per cent on Monday, when oil prices hit their highest price since March 28 on Libyan oil supply disruptions.