Oil falls more than 2% on recession, China COVID fears

LONDON

Oil slid more than 2% on Tuesday, extending losses of nearly 2% in the previous session, as recession fears and a flare-up in COVID-19 cases in China raised concern over global demand.

World Bank President David Malpass and International Monetary Fund Managing Director Kristalina Georgieva warned on Monday of a growing risk of global recession and said that inflation remains a continuing problem.

Brent crude fell $2.30, or 2.4%, to $93.89 a barrel by 1006 GMT. U.S. West Texas Intermediate crude dropped $2.12, or 2.3%, to $89.01.

"There is growing pessimism in the markets now," said Craig Erlam of brokerage OANDA.

Oil has dropped sharply on economic fears after surging earlier in 2022, when Brent came close to its record high of $147 as Russia's invasion of Ukraine added to supply concerns.

"Warnings after warnings are being issued when it comes to global economic growth," said Avatrade analyst Naeem Aslam.

Those worries aside, fears of a further hit to demand in China also weighed. Authorities have stepped up coronavirus testing in Shanghai and other large cities as COVID-19 infections rise again.