Oil falls as China's slowing export growth raises alarm bells

Oil fell after a two-day surge as Chinese trade data highlighted concerns about the nation’s economic recovery and energy demand.

West Texas Intermediate dropped below US$71 a barrel after rallying almost 7 per cent in the prior two sessions. China’s overall export growth slowed in April while imports plummeted. Demand for commodities slipped, with overseas purchases of crude, iron ore and copper all dropping from the prior month. Later on Tuesday, the U.S. Energy Information Administration’s short-term outlook due later will provide further insight on consumption.

Since dropping to the lowest intrady since 2021 on May 4th, WTI has rallied close to 16 per cent so “a bit of breather is in order,” said John Kolovos, chief technical strategist at Macro Risk Advisors. “China’s import numbers sank 7.9 per cent, which is significantly worse than what The Street was expecting. That sours risk sentiment and is a partial refection of demand from China.”

Oil has retreated about 10 per cent this year as worries over the Federal Reserve’s monetary tightening and the potential for a recession in the US outweigh a resilient physical market. Bank of America Corp. on Tuesday cut its forecast for Brent crude on a weaker outlook for global demand. Still, the United Arab Emirates, a key OPEC member, downplayed the need for deeper production cuts following curbs that started this month.