Oil prices slipped further on Tuesday as the market reassessed the OPEC+ production quota cut, and the IMF warned about the increased risk of a global recession.
Oil prices slipped over the weekend and again on Monday as the bump realized from last week’s OPEC+ meeting began to wear off. The prices continued to slip on Tuesday, as the IMF Managing Director Kristalina Georgieva and World Bank President David Malpass warned the markets on Monday of the increased risk of a global recession, calling out inflation as a continuing problem.
Recession fears have been a steady undercurrent in the oil markets recently, as have the tight supply situation that exists in the energy markets overall and the unknown but extremely crucial variable of China’s future oil demand. But any bearish sentiment was overridden last week when OPEC+ decided to cut 2 million barrels per day from its oil production quotas for November.
Last week, WTI prices climbed to $92.64 per barrel but started to fall over the weekend. On Tuesday, WTI and Brent both slipped further, with WTI falling another 1.99% on the day to $89.32 by 10:00 a.m. ET. Brent had fallen 1.74% to $94.52.
Adding to Tuesday’s bearish sentiment, Shanghai and Shenzhen, among other Chinese cities, increased Covid-19 testing efforts, with some local municipalities closing schools, tourist spots, and entertainment venues as the number of covid-19 infections there climbed to the highest level in months.
China is the world’s largest crude oil importer.
While prices have slipped over the last few days, Brent crude prices are still $17 per barrel higher than they were at the start of the year. WTI prices are up more than $14 per barrel from the start of the year.
By Julianne Geiger for Oilprice.com