Oil futures: Brent tumbles to $79/b as economic woes outweigh Russian uncertainty
Quantum Commodity Intelligence - Crude oil futures Tuesday were in sharp retreat, hitting fresh 11-month lows in the process, as sentiment turned bearish with economic concerns overriding uncertainty over Russian exports.
Front-month February ICE Brent futures were trading at $79.14/b (1855 GMT), compared to the day's range of $78.70-$83.69/b and Monday's settle of $82.68/b.
Brent was over 10% down from Monday's peak of $88.44/b.
At the same time, Jan23 NYMEX WTI was trading $73.90/b versus the day's range of $73.41-$77.88/b and Monday's settle of $76.93/b.
The firmer dollar weighed on prices in the early part of the week after an unexpected increase in US service sector activity, which triggered speculation the Federal Reserve may keep interest rates higher for longer, in turn increasing the odds of a US recession.
"The cap remains above where Russian crude is currently trading, while Asian buyers are expected to continue their purchases. However, prices came under pressure late in the session after strong economic data raised fears the Fed will continue with its aggressive rate hikes," said ANZ commodity strategist Daniel Hynes, referencing the selloff.
Volatility is expected to continue against a backdrop of EU sanctions and the G7 price cap aimed at Russia. Moscow has insisted it will not deal with any country applying the price cap, although the $60/b ceiling is unlikely to have an immediate impact on exports.
However, early reports suggested a build-up of crude carriers in Turkish waters as authorities in Ankara demanded insurers demonstrate that any vessels navigating its straits were fully covered.
Markets had resumed the downtrend following the extreme volatility of the previous session that saw headline prices go from 3% higher to 3% lower in the space of a few hours.
At one stage, prices rallied Tuesday on reports that Moscow was looking at a minimum floor price on a fixed-price basis, or applying a maximum discount for Russian barrels sold on a floating price against international benchmarks such as Dated Brent or Dubai.
Meanwhile, lockdowns in China are having a lessening impact on the economy for the first time since early October, according to research from Nomura.
As of Monday, the negative impact of China's Covid controls on its economy fell to 19.3% of China's total GDP - down from 25.1% a week ago, although the report warned that the road ahead remains challenging.
