FX.co ★ Oil Futures Settle Sharply Lower On Weak Outlook For Energy Demand

Crude oil prices fell sharply on Tuesday on concerns about outlook for energy demand with investors fearing a slowdown in global economic growth amid imminent monetary policy tightening by the Federal Reserve.

A downward revision in global growth forecast by the International Monetary Fund (IMF) weighed as well on oil prices.

The IMF has lowered its forecast for global economic growth by nearly a full percentage point, citing "seismic waves" from Russia's invasion and the "clear and present danger" of inflation in many countries.

Expectations of sharper interest rate cuts by the Fed have pushed up the dollar to a fresh two-year high, adversely impacting oil prices in turn.

West Texas Intermediate Crude oil futures for May ended down by $5.65 or about 5.2% at $102.56 a barrel.

Brent crude futures were down $6.17 or 5.41% at $106.99 a barrel a little while ago.

The dollar has climbed higher after Federal Reserve Bank of St. Louis President James Bullard said the U.S. central bank shouldn't rule out rate increases of 75 basis points to combat inflation.

More than 50 basis points is not my base case at this point as the central bank needs to move quickly to raise interest rates to around 3.5 percent this year with multiple half-point hikes, Bullard said in a virtual presentation to the Council on Foreign Relations on Monday.

Strict restrictions on movements in several parts in China to curb the spread of the pandemic have raised concerns about energy demand.