Oil Prices Struggle Against Declining Supply

Oil prices were calm on Tuesday as markets weighed signs of tightening crude supplies against growing fears that a global economic slowdown will reduce demand for crude this year.

Crude oil markets made a slow start to the week, retaining most of last week's losses amid growing signs that the US will slip into recession in the next 12 months, according to Bloomberg economists. This gloomy forecast came amid rising inflation in the country, where the Federal Reserve's high interest rate hikes have so far done little to soothe price pressures. London-traded Brent crude futures were little changed at $91.93 a barrel on Tuesday, while US West Texas Intermediate crude futures rose 0.3% to $84.75 a barrel at 21:53 GMT (01:53 GMT). Both contracts moved little on Monday. Concerns over China's future demand weighed after President Xi Jinping signaled that the country has no plans to reduce its strict zero COVID policy. A series of lockdowns and restrictions imposed under this policy have severely disrupted China's economic activity this year, reducing crude oil demand in the world's largest oil importer. However, the Chinese government has announced more spending measures to support the economy, which could lead to a rebound in local commodity demand. The People's Bank of China also kept interest rates on hold on Monday, indicating its intention to keep monetary policy accommodative for now. Members of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) have recently voiced their support for the cartel's 2 million barrels per day production cut. The cut, announced earlier this month, aims to help stabilize oil prices after they fell from yearly highs. The US has criticized the cut and released more supply from the Strategic Petroleum Reserve (SPR) to limit increases in crude oil prices. The world's largest economy is struggling to cope with inflation, which has reached 40-year highs, largely due to fuel prices. The Federal Reserve is expected to continue raising interest rates at a rapid pace to combat inflation; this move is expected to push the dollar higher and put pressure on oil markets. Rate hikes are also expected to cool global economic growth, which is a negative signal for crude oil markets. On the other hand, an escalating conflict between Russia and Ukraine could disrupt crude oil supplies from Moscow. A harsher-than-expected European winter could also increase demand for oil, especially for heating purposes. Broad market sentiment also improved after the UK government withdrew a controversial tax cut plan, easing fears of a debt crisis in the country. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!