From S&P Global Commodity Insights, May 10, 02:52 UTC:
Crude oil futures were sharply lower in mid-morning Asian trade May 10, extending steep overnight declines, as recession fears, hurdles to an European Union-ban on Russian oil and the ongoing spread of COVID-19 in China saw sell-offs across the financial markets.
At 10:22 am Singapore time (0222 GMT), the ICE July Brent futures contract was down $1.30/b (1.23%) from the previous close at $104.64/b, while the NYMEX June light sweet crude contract fell $1.24/b (1.2%) at $101.85/b.
Both markers had plummeted by close to $7/b overnight, their biggest one-day fall since late-March, as a confluence of bearish factors sent financial markets tumbling across the board. The downbeat mood continued in the May 10 Asian morning session, analysts said.
"The worm turned for oil bulls positioned for EU sanctions only to get sideswiped by headlines, suggesting Shanghai is tightening mobility restrictions and no EU embargo agreement," said SPI Asset Management Managing Partner Stephen Innes in a May 10 note.
"However, the swift repricing of global recession risks on the back of central banks hiking rates into a perfect storm is triggering investors' sell-all reaction mode."
The possibility of a quick resolution to an EU draft to ban Russian oil remained remote as member-state Hungary continued to oppose the plan. European Commission President Ursula von der Leyen had travelled to Hungary May 9 to persuade Prime Minister Viktor Orban to support the ban.
Meanwhile, China continues to fight the COVID-19 spread within its borders. Shanghai tightened its COVID-19 restrictions despite falling infections in the city, with notices issued in several districts over the weekend ordering residents to stay home, according to media reports.
Global recession risk looms...
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