Oil falls 3% on weak economic data, supply concerns
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Oil prices sank to their lowest since late March on Tuesday on weak economic data from China, expectations of interest rate hikes by the U.S. Federal Reserve and European Central Bank (ECB) this week, and concerns about ample supply.
Brent crude fell $2.41, or 3.04%, to $76.90 a barrel by 1404 GMT while U.S. West Texas Intermediate (WTI) crude lost $2.49, or 3.29% to $73.17.
The market shrugged off news that OPEC oil output fell in April, as sanctioned countries Russia and Iran continued to for their crude.
Iran's oil production has surpassed 3 million barrels per day, the country's oil minister said on Tuesday, according to the oil ministry's website SHANA.
Iran pumped 2.4 million bpd on average in 2021 and has been under U.S. sanctions since 2018.
Oil prices have also come under pressure after official data on Sunday showed manufacturing activity in China, the world's top crude importer, fell unexpectedly in April. This marks the first contraction in the manufacturing purchasing managers' index since December.
"Most sub-indicators show that this might not be a short-term aberration," said Iris Pang, Greater China chief economist at ING, pointing to a weakening export market, lower imports in March and falling wages.
A cloudy economic outlook in other parts of the world also weighed on prices, analysts said.
"The unpredictable action of central banks in their mission to tame elevated consumer and producer prices, the rhetoric and action of consuming and producing nations have all cast a rather long shadow of doubt on prospects going forward," oil broker PVM's Tamas Varga said.
Investors will look for market direction from expected interest rate hikes by inflation-fighting central banks, which could slow economic growth and dent energy demand.
The U.S. Federal reserve is expected to increase interest rates by another 25 basis points on Wednesday.
The ECB is also expected to raise rates at its regular policy meeting on Thursday.
A poll on Monday showed that U.S. crude oil stockpiles, meanwhile, are expected to have fallen for a third consecutive week, providing some oil price support. [EIA/S]
The poll was conducted ahead of reports from the American Petroleum Institute, due at 4:30 p.m. EDT (2030 GMT) on Tuesday.
