Oil prices fell by 2 per cent on Tuesday on weak economic news from the US and Germany as Brent futures lost $1.76 or 2.4 per cent to settle at $73.02 per barrel and the US West Texas Intermediate (WTI) crude depreciated by $1.77 or 2.5 per cent to close at $68.93 a barrel.
Indicators of weakness in the US and Europe’s largest economy, Russia, fed fears of slower energy demand, along with signs from several countries that oil output was on track to increase.
Data from the US, the world’s largest oil producer, showed consumer confidence in February deteriorated at its sharpest pace in over 3 years.
The Conference Board’s consumer confidence index dropped 7 points, the biggest decline since August 2021, to 98.3 this month.
Analysts said President Donald Trump’s stated plans for higher tariffs have raised inflation worries at the US Federal Reserve.
This could lead the US central bank to keep interest rates higher, which in turn could slow economic growth and energy demand.
Meanwhile, tariffs against Canadian and Mexican imports, scheduled to start on March 4, may boost oil prices by reducing supplies from both countries.
Data also showed that the German economy shrank by 0.2 per cent in the final quarter of 2024 from the previous quarter.
However, oil prices could be affected by the possibility of a peace deal between Russia and Ukraine, that could lead to the lifting of Russian sanctions and increase Russian oil in the market.
Rising production from the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ could also deter prices.
In Iraq, the second-largest OPEC producer, oil major BP signed a deal to redevelop four oil and gas fields.
The country is also waiting for Turkey’s approval soon to restart oil flows from the Iraqi Kurdistan region.
In Nigeria, another OPEC member, oil production rose to 1.8 million barrels per day from just 1 million barrels per day over a year ago.
The American Petroleum Institute (API) estimated that crude oil inventories in the United States fell by 640,000 barrels for the week ending February 21.
This offsets just a small part of the 18 million barrels of builds in US crude oil inventories during the last four weeks.
Official data from the US Energy Information Administration (EIA) will be released later on Wednesday.