Oil prices fell on Tuesday, retreating from strong gains in the previous two sessions, due to lackluster Chinese import data and worries about U.S. economic growth, banking sector turmoil and debt-ceiling talks in Washington that could pressure demand.
Brent crude was down 74 cents, or 1%, at $76.27 a barrel by 12:57 p.m. EDT (16:57 GMT). U.S. West Texas Intermediate (WTI) crude fell 59 cents, or 0.8%, $72.59.
“We have seen weaker-than-expected demand in China … layer on to that the fears that Congress won’t act to resolve the debt ceiling, combined with a regional banking crisis, it leads to additional fears of an economic slowdown,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
On Monday, both benchmarks rose more than 2% on hopes the U.S., the world’s biggest oil consumer, could avoid a harsh recession and as some traders viewed crude’s three-week slide as overdone.
But data on Tuesday showed China’s imports contracted sharply in April, while exports rose at a slower pace, signaling feeble domestic demand.
Crude looks to be range-bound between $70 and $82 until we see clarification that Asian demand is intact,” said Dennis Kissler, senior vice president of trading at BOK Financial.
Markets were watching U.S. President Joe Biden and top Republican lawmakers’ comments on raising the $31.4 trillion U.S. debt ceiling, fearing an unprecedented default if Congress does not act in three weeks.
U.S. consumer price index (CPI) figures for April are due to be released on Wednesday and could determine the Federal Reserve’s next interest rate decision. The U.S. central bank raised interest rates last week and dropped guidance about the need for future hikes.
New York Fed President John Williams said inflation remains too high and warned that the central bank will raise rates again if it needs to.
U.S. consumers said last month that they expected slightly lower inflation in a year’s time, a report from the New York Fed showed on Monday.