London, Tuesday, 03 January 2023
As investors evaluated macroeconomic challenges for demand gauges, WTI oil futures extended losses to fall below $78 per barrel on Tuesday, dropping dramatically from the one-month high of $80.3 reached in the previous session.
Concerns that the rising number of Covid cases in the world's second-largest economy may have an impact on oil demand were confirmed by PMI data showing that the manufacturing sector in major consumer China continued to drop in December. In the meantime, IMF chief Kristalina Georgieva issued a warning that 2023 will be a difficult year due to deteriorating activity in the primary engines of growth, particularly the US, Europe, and China.
Investors are keeping an eye on Russia's potential follow-up steps after Moscow prohibited oil exports to foreign buyers that embrace the G7 price cap as well as the possibility of more production cutbacks from OPEC+ on the supply side.
The US oil benchmark increased by nearly 7% in 2022, a year that was extremely volatile due in large part to the invasion of the Ukraine, problems with China's economy, and brisk rate hikes.
(Report by: The Decision Maker - Finance and Energy editors)