Oil dips $2 on global economic concerns

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Crude oil prices slipped on Tuesday on concerns about a global economic slowdown and an expected build in US oil inventories. Brent futures for March delivery fell $2.06, or 2.3%, to $86.13 a barrel. US crude fell $1.49, or 1.8%, to $80.13 per barrel.

US business activity contracted in January for the seventh straight month, though the downturn moderated across both the manufacturing and services sectors for the first time since September and business confidence strengthened as the new year began.

The US economy “still could roll over and some energy traders are still sceptical on how quickly China’s crude demand will bounce back this quarter,” OANDA analyst Edward Moya said in a note.

Euro zone business activity made a surprise return to modest growth in January, S&P Global’s flash Composite Purchasing Managers’ Index (PMI) showed. Yet British private sector economic activity fell at its fastest rate in two years.

Economies in the six-member Gulf Cooperation Council (GCC) will grow this year at half the rate of 2022 as oil revenues take a hit from an expected mild global slowdown, according to the median view from a Reuters poll of economists.

Reports are due from the American Petroleum Institute, at 4:30 p.m. ET (2130 GMT) on Tuesday, and from the Energy Information Administration, at 10:30 a.m. (1530 GMT) on Wednesday.

Meanwhile, an OPEC+ panel is likely to endorse the producer group’s current oil output policy when it meets next week, five OPEC+ sources said on Tuesday, as hopes of higher Chinese demand driving an oil price rally are balanced by worries over inflation and a global economic slowdown.

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