Oil prices drop to around $90/barrel in volatile trade

LONDON, Oct 18 (Reuters) – Oil prices fell in volatile trade on Tuesday on fears of increased U.S. supply amid a slowing economy and falling Chinese demand for fuel.

Brent crude futures fell $1.35, or 1.47%, to $90.27 a barrel at 2:06 p.m. GMT.

U.S. West Texas Intermediate (WTI) crude futures were down $1.77, or 2.07%, at $83.69, after rising more than $1 earlier in the session.

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China’s fuel demand outlook weighed on sentiment after the world’s top crude oil importer delayed the release of economic indicators originally scheduled for release on Tuesday. No date was given for a rescheduled release. Read more

China’s adherence to its zero-COVID policy has continued to heighten uncertainty over the country’s economic growth, said CMC Markets analyst Tina Teng.

Also in focus was the Bank of England’s plan to start selling off the vast holdings of government bonds it accumulated during the coronavirus crisis. This pushed up long-term yields, indicating heightened risks to financial stability.

On the supply side, market chatter over news of the release of US oil reserves weighed on sentiment, said UBS analyst Giovanni Staunovo.

The Biden administration plans to sell oil from the Strategic Petroleum Reserve in a bid to lower fuel prices ahead of next month’s congressional elections, sources told Reuters on Monday.

In addition, U.S. crude oil inventories are expected to have risen for the second consecutive week, a preliminary Reuters survey showed on Monday.

Production in the Permian Basin of Texas and New Mexico, the largest U.S. shale oil basin, is expected to increase by about 50,000 barrels per day (bpd) to a record 5.453 million bpd this month. , said the Energy Information Administration.

Price support came in early trading from investors who increased their long positions in futures after a 2 million barrel per day (bpd) cut in agreed OPEC+ production targets, ANZ Research analysts said in a note.

Several members of the oil-producing group endorsed the cut after the White House accused Saudi Arabia of coercing some countries to back the move, a charge Riyadh denies.

“Even though the production cut is unlikely to actually be half that, the US government views it as an affront… The question now is how the US will respond, as this could have a significant impact on the oil market,” Commerzbank said in a note.

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Reporting by Rowena Edwards in London, Additional reporting by Isabel Kua in Singapore, Editing by David Goodman and Ed Osmond

Our standards: The Thomson Reuters Trust Principles.

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