MELBOURNE (Businesshala) – Oil prices tumbled on Wednesday after a mixed finish in the previous session, amid concerns that rising coal and natural gas prices in China, India and Europe will dampen inflation and slow global growth, leading to The demand for oil will decrease.
A stronger US dollar trading near one-year highs also had an impact on oil prices, as it makes oil more expensive for those holding other currencies.
US West Texas Intermediate (WTI) crude futures fell 71 cents, or 0.9%, to $79.93 a barrel by 0247 GMT on Tuesday, after gaining 12 cents.
Brent crude futures fell 70 cents, or 0.8%, to $82.72 a barrel, down 23 per cent on Tuesday.
The International Monetary Fund on Tuesday cut its growth outlook for the United States and other major economies, amid concerns over supply chain disruptions and cost pressures halting the global economic recovery from the coronavirus pandemic.
Commonwealth Bank analysts highlighted the IMF’s concern that “the momentum has weakened and the uncertainty has increased”.
However, oil watchers are still focused on whether rising gas and coal prices will increase demand for oil products for power generation.
“There are growing expectations that higher prices of gas and thermal coal are likely to drive demand for alternative fuels such as diesel and fuel oil,” analysts at ANZ Research said in a note.
Markets are also awaiting US oil inventory data, delayed by a day after the Columbus Day holiday on Monday.
Analysts polled by Businesshala forecast US crude inventories rose by 100,000 barrels in the week to October 8, marking a third consecutive week of growth.
They also estimated that gasoline stocks increased by about 100,000 barrels, while distillate inventories, which include diesel, heating oil and jet fuel, declined by about 1 million barrels.
Data from the American Petroleum Institute, an industry group, is due Wednesday at 4:30 p.m. EDT (2030 GMT) and Thursday from the U.S. Energy Information Administration.