Investing.com -- U.S. crude oil prices settled lower Tuesday, as concerns about a slowing economy that threatens demand and a jump in the dollar weighed on sentiment just a day ahead of fresh U.S. crude inventory data.
On the New York Mercantile Exchange crude futures settled $1.51 lower at $77.12 a barrel, while on London's Intercontinental Exchange, Brent fell 2.2% to settle at $80.91 a barrel.
“The second half of the year is poised to be more challenging for the global economy though as conditions tighten further and prior tightening takes hold," said Edward Moya, a market analyst at Oanda.
The dour outlook on the global economy comes as investors have been forced to reprice further central bank tightening ahead of the Federal Reserve’s May 2-3 meeting. The Fed is expected to lift rates by 0.25% and signal that rate cuts before year-end aren’t likely.
The repricing of a more aggressive Fed and jitters about the global economy forced investors into the safe arms of the dollar, further weighing on oil prices. A stronger dollar makes oil more expensive for holders of foreign currency.
This latest slide has seen crude prices give up their OPEC-led gains racked up earlier this month, when the OPEC and its allies, or OPEC+, surprised investors by announcing further oil output cuts of about 1.16 million barrels per day.
“It would appear crude prices have now settled back into their pre-OPEC+ intervention trading ranges, with Brent between $78-$88 and WTI $73-$83,” Moya added.
The lower settlement for crude prices comes ahead of the weekly snapshot of U.S. inventories from the American Petroleum Institute, expected to show another draw in supplies following the prior week’s 2.7M barrel decline.
API is expected to release its log on U.S. crude, gasoline, cushing and distillate stockpiles for the week ended Apr. 21. The figures serve as a precursor to the official weekly supply data due on Wednesday from the EIA, or U.S. Energy Information Administration.