Oil futures settled lower on Tuesday, extending losses from the previous session, on concerns about outlook for energy demand amid rising possibility of a global recession.
World Bank President David Malpass and International Monetary Fund Managing Director Kristalina Georgieva both warned of recession risks, raising concerns over global demand.
A surge in Covid-19 cases in China, and fears of further monetary policy tightening also weighed.
Chicago Fed president Charles Evans said there is a strong consensus at the Federal Reserve to raise the target policy rate to around 4.5% by February and hold it there for most of 2023.
Separately, Fed Vice Chair Lael Brainard laid out a case for exercising caution, saying that previous rate increases were starting to slow the economy and the full brunt of tighter policy would not be felt for months to come.
West Texas Intermediate Crude oil futures for November ended lower by $1.78 or about 2% at $89.35 a barrel.
Brent crude futures settled at $94.29 a barrel, down $1.90 or about 2%.
According to reports, Shanghai and other big Chinese cities, including Shenzhen, ramped up testing following a surge in coronavirus infections. Some local authorities have reportedly closed schools, entertainment venues and tourist spots.
Markets look ahead to weekly crude inventory reports from the American Petroleum Institute (API) and U.S. Energy Information Administration (EIA). The API data is due later in the day, while EIA is scheduled to release its report Wednesday morning.
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