Oil prices dropped more than 1% yesterday

22 Feb 2023 , 08:25 AM

Brent crude oil fell more than 1% in a choppy session on Tuesday as investors booked profits on the day’s gains as continuing worries over the state of the world economy trumped supply restraints.

Since recent statistics increased the likelihood that interest rates would stay higher for longer, the global financial market is firmly focused on the release of the U.S. Federal Reserve’s most recent meeting minutes on Wednesday.

WTI for March in the United States, which ended on Tuesday, dropped 18 cents, or 0.2%, to $76.16 per barrel. At $76.27, the second-month contract lost 19 cents, or 0.2%.

Oil priced in dollars is more expensive for holders of foreign currencies when the dollar is stronger.

Brent briefly turned positive earlier in the morning as the market rose on better-than-anticipated business activity surveys in Europe and Britain that suggested the European economy may not be as bad off as originally thought.

In anticipation of a resurgence in Chinese demand this year with the removal of COVID-19 restrictions, oil prices increased by more than 1% on Monday.

Due to a US public holiday, the WTI contract did not settle on Monday. As a result, the industry and official weekly U.S. oil inventory reports were also postponed by one day, to be released on Wednesday and Thursday, respectively.

Following price caps placed by the West on Russian oil and oil-related products as a result of the invasion of Ukraine, Russia expects to reduce its crude oil production by 500,000 barrels per day, or about 5% of its output, in March.

According to reports from news agencies, Deputy Prime Minister Alexander Novak stated on Tuesday that the cut, which was announced this month, will initially only apply to March output.

Russia is a member of the OPEC+ group, which consists of OPEC and allies and which decided in October to reduce oil output targets by 2 million bpd through the end of 2023.

Separately, American officials gave their approval for Freeport LNG’s Texas facility, the second-largest liquefied natural gas export facility in the country, to partially reopen after it was forced to shut down due to a fire in June.

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