By Peter Nurse
Investing.com — Oil prices fell Tuesday amid concerns that global growth prospects from key regions are still negative.
Futures were trading 0.2% less at $84.43/barrel by 09:15 ET (13.15 GMT), while contract prices fell 0.3% to $90.98.
On Tuesday, prices continued to be affected by signs of uncertainty in the United States of America and China, which are the two largest oil consumers in the world.
The delayed Chinese third-quarter number came in considerably below the Communist Party’s own 5.5% target, weighed by its long-standing Covid-zero policy, while the October S&P Global release showed U.S. business activity contracting for a fourth straight month.
According to the Ifo Institute’s survey published earlier this week, nearly one in four German businesses are looking for new loans. This figure is the highest since 2017.
David Solomon, CEO Goldman Sachs, said Tuesday that he believes a U.S. depression is “most likely”, whereas a recession could be occurring in Europe.
On the supply side of things, tightening markets worldwide for liquefied oil and major oil producers cutting supply have led to “the first truly global energy crises,” according to the head of International Energy Agency on Tuesday.
IEA Executive Director Fatih Birol said the recent decision by the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, to cut 2 million barrels per day of output was “risky.”
He stated, “It is especially risky because several economies around the globe are on the verge of a recession. If that is the global recession…I found it really unfortunate.”
That said, Birol said the group’s members have “huge” oil reserves available to conduct another round of releases if needed to smooth out supply disruptions.
The latest estimate of U.S. crude oil inventories, from the , is due later in the session, and is expected to rise this week after last week’s surprise 1.3 million barrel fall.
“Energy prices look like they will continue to fall,” said Simon White, a macro strategist at Variant Perception, a widely respected investment-advisory firm. “Commodities markets such as oil are the marginal recipients of excess liquidity (real money growth less economic growth). Weak excess liquidity indicates oil prices are likely to continue to keep dropping over the next six months.”