By Adedapo Adesanya
Crude oil prices slipped on Tuesday on concerns about a global economic slowdown and an expected build in US oil inventories.
At the market yesterday, the price of Brent futures fell by $2.06 or 2.3 per cent to $86.13 a barrel, while the US West Texas Intermediate (WTI) crude dropped $1.49 or 1.8 per cent to $80.13 per barrel.
Worries gripped that market as business activity in the US contracted in January for the seventh straight month.
In the world’s largest economy, the downturn moderated across the manufacturing and services sectors for the first time since September, and business confidence strengthened as the new year began.
Analysts said the US economy could still roll over as some energy traders are still sceptical about how quickly China’s crude demand will bounce back this quarter.
In Europe, business activities made a surprise return to modest growth in January, S&P Global’s flash Composite Purchasing Managers’ Index (PMI) showed.
However, British private sector economic activity fell at its fastest rate in two years.
For economies in the six-member Gulf Cooperation Council (GCC), they will grow this year at half the rate of 2022 as oil revenues take a hit from an expected mild global slowdown, analysts noted.
Also, a panel of the Organisation of the Petroleum Exporting Countries and its allies, OPEC+, is likely to endorse the producer group’s current oil output policy when it meets next week.
This is as hopes of higher Chinese demand continue to drive an oil price rally are balanced by worries over inflation and a global economic slowdown. Strong demand figures from China are fuelling optimism in the markets.
This spurred investment bank, JP Morgan, to raise its forecast for Chinese crude demand but maintained its projection for a 2023 price average of $90 a barrel for Brent crude.
The bank added that it would be difficult for oil prices to reach the $100 mark again except if there is any major geopolitical event.
Crude oil inventories rose by 3.378 million barrels, American Petroleum Institute (API) data showed on Tuesday.
US crude inventories increased by 13 million barrels last year, according to API data, while crude stored in the nation’s Strategic Petroleum Reserves sunk by 221 million barrels.
The market will be waiting for official figures from the Energy Information Administration (EIA), which are due on Wednesday.
