Oil fell the most in nearly four months as weak trading volumes compounded the fallout from gloomy reports on the health of the global economy.
Negative data on the US labor market and Chinese manufacturing sent West Texas Intermediate below $72 a barrel on Tuesday to its lowest close since March 24. The 5.3% drop was the biggest daily percentage drop since Jan. 4. from December 2022 on Mondays in the middle of holidays in Asia and the UK.
“The market is an investor desert,” said Scott Shelton, energy specialist at ICAP. “The fundamental information that generates predictable price action does not exist.”
Vacancies at US employers fell to a nearly two-year low in March, another sign of a slowing labor market. Activity in China’s export-oriented manufacturing sector missed estimates in April, a possible sign of a recession among customers in the US and Europe. And Iran’s oil minister, Javad Owji, said the country has increased production to more than 3 million barrels a day, providing additional supplies to the market.
Morgan Stanley cut its forecast for third-quarter Brent crude prices by $12.50 to $77.50 a barrel, saying Russian supplies remain high enough and much of the boost to demand from the China’s reopening has probably already happened.
“It will take some evidence in the physical market on the tightening we see in our balances before we see any more positive or engaged trading activity,” Emily Ashford, energy analyst at Standard Chartered Bank, said by phone.
Prices:
- WTI for June delivery fell $4 to settle at $71.66 in New York.
- Brent for July settlement fell $3.99 to settle at $75.32 a barrel.
-With the help of Archie Hunter.
