FX.co ★ Oil Futures Settle Sharply Lower Ahead Of Inventory Data

Crude oil prices fell sharply on Tuesday due to rising concerns about the outlook for energy demand due to the economic slowdown in China amid stringent coronavirus lockdowns in Shanghai and elsewhere.

Although the dollar has drifted lower today,fears of sharp interest rate hikes by the Federal Reserve weighed on oil prices.

West Texas Intermediate Crude oil futures for June ended lower by $2.76 or about 2.6% at $102.41 a barrel.

Brent crude futures were down $2.14 or about 2% at $105.44 a barrel a little while ago.

Analysts expect China to maintain the basic approach of "zero Covid" over the next few months despite the mounting social and economic costs.

Meanwhile, as EU leaders firm up plans to announce a sixth tranche of sanctions against Russia this week, Slovakia is seeking an exemption against approving a ban on Russian oil. Hungary also said it will not support sanctions on Russian oil and gas shipments.

Traders looked ahead to weekly inventory reports from the American Petroleum Institute (API) and U.S. Energy Information Administration (EIA). The API's report is due later today, while EIA is scheduled to release its data Wednesday morning.

Markets also look ahead to a meeting of ministers from OPEC and its allies for directional cues.