Title: Oil drops as economic worries, strong dollar weigh

May 10, 2022 02:41AM ET

By: AnalysisWatch

Oil prices fell more than 1% on Tuesday, continuing the previous day's steep declines, as the coronavirus lockdown in top oil importer China, a strong dollar and growing recession risks added to concerns about the outlook for global demand.

At 02:07 AM ET, Brent crude was down $1.19, or 1.1%, at $104.75 a barrel after sliding as low as $103.19.

U.S. West Texas Intermediate crude fell $1.07, or 1%, to $102.02 a barrel, after hitting a daily low of $100.44 earlier.

On Monday, both benchmarks posted their biggest daily percentage losses since March, falling 5% to 6%.

The declines reflected trends in global financial markets as investors divested from riskier assets amid concerns about interest rate hikes and their resulting impact on economic growth.

The dollar held near its 20-year high, making oil more expensive for holders of other currencies.

Recent data showed Chinese export growth slowed to single digits, the weakest in nearly two years, as the country expanded lockdown measures to contain the spread of COVID-19.

Oil prices received a boost last week after the European Commission proposed a gradual embargo on Russian oil. However, approval was delayed due to requests from Eastern European member states for exemptions and concessions.

A new version being drafted is likely to lift the ban on EU tankers carrying Russian oil following pressure from Greece, Cyprus, and Malta, an EU source said.

Financial markets also fear that some European economies could be squeezed if Russian oil imports are further curtailed or Russia cuts off gas supplies in retaliation.

According to a preliminary Reuters survey of weekly data, inventories of crude oil, distillates and gasoline likely fell last week.