Oil Futures Plunge Sharply On Recession Fears

Crude oil prices plunged sharply on Tuesday amid concerns about outlook for energy demand following a surge in Covid cases in China.

Fears about Fed tightening and a possible global slowdown after a survey showed business growth across the euro zone slowed further last month on inflationary pressures weighed as well on oil prices.

A strong dollar too contributed to the sharp drop in oil prices. The dollar index climbed to a near two-decade high of 106.79, gaining more than 1.5%, amid rising prospects of a series of sharp interest rate hikes by the Federal Reserve.

Oil prices had moved higher in the previous session amid supply concerns, driven by lower OPEC output and a strike in Norway.

West Texas Intermediate Crude oil futures for August ended lower by $8.93 or about 8.2% at $99.50 a barrel.

Brent crude futures were down $10.89 or 9.59% at $102.61 a barrel a little while ago.

Chinese authorities scrambled to contain fresh outbreaks, with cases reported from at least nine provinces as of Monday, weeks after the government brought Shanghai's crippling early summer epidemic under control.

Shanghai said it would begin new rounds of mass COVID-19 testing of its 25 million residents, reigniting worries about potential lockdowns.

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