Oil fell after a two-day surge as Chinese trade data highlighted concerns about the nation’s economic recovery and energy demand.
West Texas Intermediate declined toward $72 a barrel after rallying almost 7% in the prior two sessions. China’s overall export growth slowed in April while imports plummeted, which also contributed to weaker wider markets on Tuesday. Demand for commodities fell last month, with overseas purchases of crude, iron ore and copper all dropping from the prior month.
Oil has retreated about 10% this year as worries over the Federal Reserve’s monetary-tightening campaign and the potential for a recession in the US outweigh a resilient physical market. Traders who were holding out hope for China driving demand after its emergence from strict Covid policies will have to assess the implications of the latest data for prices.
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“The drop in China’s import in April feeds into recent growing demand concerns in the oil market,” said Jens Pedersen, director of oil and commodities research at Danske Bank.
The US Energy Information Administration’s short-term outlook due later Tuesday will provide further insight. PVM Oil Associates Ltd. analyst Tamas Varga expects the report may show a more upbeat outlook for global demand and supply, and possibly a tighter market as the Organization of Petroleum Exporting Countries and its allies cut production.
Consumer-inflation data in the US on Wednesday will also be closely scrutinized for clues on the Federal Reserve’s policy path.
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--With assistance from Yongchang Chin.
