Oil fell by more than US$4 a barrel overnight, as traders focused on the prospect of recession in major economies this year, especially with rising COVID-19 cases in China.
According to Reuters, the price of Brent crude oil has fallen by 9.4 per cent in the last two days, which is its greatest two-day loss at the start of the year since January 1991.
Overnight, Brent futures settled at US$77.84 a barrel, falling US$4.26, or 5.2 per cent. U.S. crude settled at US$72.84 a barrel, shedding US$4.09, or 5.3 per cent.
“Crude oil is trading lower on concerns around China COVID-19 and the US Federal Reserve forcing a global recession … both demand destruction events,” said Bob Yawger, director of energy futures at Mizuho in New York.
The fall in crude oil prices comes after OPEC oil output rose last month.
The OPEC+ oil cartel had recently agreed to cut production markets to “support the market”, but OPEC pumped 29 million barrels per day in December, which was an extra 120,000 barrels per day compared to November.
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