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Title: Oil prices fall on concerns over recession, China COVID curbs

May 24, 2022 02:45AM ET

By: AnalysisWatch

Oil prices fell more than $1 on Tuesday as concerns over a possible recession and China's COVID-19 restrictions prevailed over expectations of tight global supplies and a surge in fuel demand with the summer driving season in the United States.

Brent crude futures for July fell $1.34, or 1.2 percent, to $112.08 a barrel at 0606 GMT. US West Texas Intermediate (WTI) crude futures for July delivery fell $1.28, or 1.2 percent, to $109.01 a barrel.

Brent crude gained 0.7 per cent on Monday, while WTI was almost unchanged.

At the annual economic summit in Davos, several threats to the global economy topped the list of concerns among the world's rich, with some pointing to the risk of a global recession.

International Monetary Fund Managing Director Kristalina Georgieva said she did not expect a recession in major economies, but could not rule it out.

While life is expected to return to normal in Shanghai, China's trading hub, from 1 June, thanks to a decrease in the number of coronavirus cases, a surge of new cases of COVID-19 in Beijing has raised concerns about further restrictions.

Ninety-nine new cases were detected in the Chinese capital on Sunday, up from 61 the previous day - the highest daily number so far during the month-long outbreak, which has seen dozens of new infections every day.

Losses have been limited by the expectation that demand for petrol will remain high in the face of a shortage of supplies.

In the US, the Memorial Day weekend marks the start of the peak travel season.

An embargo on Russian oil imports is likely to be decided by the European Union 'within days', said its main member, Germany, as Moscow sees its economic ties with China grow after being isolated by the West over its invasion of Ukraine.

The world is facing an oil supply crisis and most companies are avoiding investing in the sector because of pressures on green energy, the head of Saudi Aramco told Reuters.

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