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Crude oil prices were sent tumbling on Tuesday morning, with WTI falling below $73 per barrel, with Brent falling below $77 per barrel on jitters about the economy.
Oil futures are set to finish out the day on Tuesday at their lowest levels since the end of March as the market looks toward the Fed’s next policy decision.
WTI for June delivery (CLM23) fell $3.12 (-4.18%) on Tuesday by 10:45 a.m. to $72.56 per barrel. Brent crude oil for July 2023 delivery (BRNN23) fell $3.07 (-3.87%) per barrel to $76.24.
New data from China—the world’s top crude oil importer—on Monday revealed rather disappointing manufacturing activity data, which could play an important role in global oil demand. Add to this disappointing data the U.S. banking catastrophe and the fear of yet another Fed rate hike later this week, and the conditions are perfect for jitters and profit taking while the getting was good.
All of the gains seen from OPEC’s surprise production cut announcement that the group made at the end of March have now been completely dissolved. OPEC+ agreed at the end of March to cut another 1.6 million barrels per day from its production quotas beginning in May. The news sent shockwaves into the oil market, and prices rallied. WTI spiked above $83 per barrel on the news.
Hedge funds and money managers sold off 87 million barrels in the seven days leading up to April 25 as 35 million barrels of Brent, 19 million of WTI, and 13 million of gasoline, 6 million barrels of diesel, and 14 million barrels of gas oil, according to Reuters, for a drop in combined position to 447 million barrels, down from 534 million barrels a week prior.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.