Oil falls on concerns of faltering economic growth to hit demand


Oil prices dropped on Wednesday on concerns that demand growth will fall as major economies suffer through inflation and supply chain issues though surging prices for power generation fuel such as coal and natural gas limited losses.

Brent crude futures fell 5 cents to $83.37 a barrel while U.S. West Texas Intermediate crude futures fell 6 cents to $80.58 a barrel after gaining 12 cents on Tuesday.

Both contracts pared losses after falling as much as 70 cents earlier when China, the world’s biggest crude importer, released data showing September imports fell 15% from last year.

However, China, along with Europe and India, remains mired in coal and natural gas shortages that have pushed up prices for electricity generation fuels.

On Tuesday, the International Monetary Fund (IMF) cut its growth outlook for the United States and other major economies on worries supply chain disruptions and cost pressures are holding back a global economic recovery from the coronavirus pandemic.

A strong U.S. dollar, trading near a one-year high, also weighed on oil prices, as it makes oil more expensive for those holding other currencies.

However, oil watchers are still focused on whether soaring gas and coal prices will lead to more demand for oil products for power generation.

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