Oil hits lowest since January on creeping economic uncertainty

NEW YORK, Dec 6 (Reuters) – Global oil prices fell to their lowest since January on Tuesday, extending a downward trend as concerns grew about global demand to offset any bullish effects from the EU-led – EU on Russian oil sales.

Brent crude futures for February delivery were down $2.35, or 2.8%, at $80.33 a barrel at 11:38 a.m. EDT. [1638 GMT]the lowest since Jan. 10. West Texas Intermediate crude (WTI) fell $2.01, or 2.6%, to $74.92.

“In this market, the sentiment is more negative,” said Eli Tesfaye, market expert at RJO Futures. “We could be looking at WTI 60 a barrel the way things are going. I think $80 will be a new high, and I would be very surprised to see anything higher than that.”

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Service sector activity in China just hit a six-month low, and Europe’s economy has slowed due to high energy costs and rising interest rates.

Crude futures on Monday recorded their biggest daily decline in two weeks after US services industry data showed a stronger US economy and drove expectations for higher interest rates than recent estimates.

The US dollar index fell on Tuesday but was still supported by bets on higher interest rates, following its biggest rally in two weeks on Monday.

A strong greenback makes dollar-denominated oil more expensive for buyers holding other currencies, reducing demand.

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In China, more cities are easing restrictions related to COVID-19, fueling expectations of increased demand in the world’s largest oil exporter, although that is not enough to cover the future.

The market was measuring the impact of the production price of 60 dollars per barrel in the Russian crude set by the Group of Seven (G7) nations, the European Union and Australia, contributing to the volatility of the market. So far there has been “a lack of impact on the Russian move”, said Matt Smith, lead oil analyst at Kpler.

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“Ocean shipments and Russian production are not falling, and fears of inflation – the ferocity is sweeping the risk of a broader market tilt,” Smith said.

Russia has said it will not sell oil to anyone who signs up to the price cap. Russia’s January-November production of oil and gas condensate rose 2.2% from a year earlier to 488 million tons, according to Deputy Prime Minister Alexander Novak, who expects a slight decrease in production after the latest sanctions.

Reporting by Shariq Khan Additional reporting by Rowena Edwards Editing by Barbara Lewis and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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