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Oil wipes out gains for the year as Europe stalls

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Oil loses more than 4% on a day of fear of recession (Image: Disclosure / Rosneft)

The markets of Petroleum returns this Tuesday (6) the gains of 2022, echoing concerns about global demand for the commodity and the validity of new sanctions against Russian trade.

By 3:40 pm, US crude oil and Brent futures were down 4.29% and 4.40%, respectively.

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The day’s drop in contracts brings Brent below $80/barrel and WTI close to $70/barrel. The last time these levels were observed was in December 2021.

Oil feels slowing economies

The more pessimistic outlook for global growth in 2023 contaminated the commodity’s trading environment, in the wake of the release of worrying indicators about the basic industry of Europe🇧🇷

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O PMI (an indicator that measures the pace of economic activity) in the construction sector on the Old Continent fell to 43.6 points in November, consolidating the seventh consecutive month of declines. A reading below 50 points points to a contraction in activity.

The lifting of S&P Global points out that the most significant declines occurred in the two most advanced economies in the European bloc, namely France and Germany.

The negative reading of the European data also converges with the worst feeling coming from the United Statesafter data from the American payroll suggested the persistence of inflationary forces arising from the wage burden.

The slowdown of the Atlantic economies already shows the impacts of the tightening of monetary conditions and leaves doubts whether a recession on a large scale will not ultimately be the price to be paid for controlling the inflation🇧🇷

Derivatives price drops in China

The traces of the economic slowdown can also be felt in China, the world’s largest oil buyer, which announced measures to stimulate the purchase and consumption of derivatives.

According to a Chinese news agency, Xinhua, China’s National Development and Reform Commission will deduct about US$62 for every ton of gasoline sold; diesel will also receive a cut of around US$ 60. This is the second time that the agency has reduced the selling price.

The central government also directed the three largest oil companies in the country to maintain constancy in oil production and facilitate the transportation of derivatives in order to guarantee stability in supply.

Source: Moneytimes

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