Yesterday's rally in oil has reversed with crude trading below $103.90 in a $4 decline. This is the first day of declines since oil surged from $95, forming somewhat of a double bottom.
The IMF today took down global GDP forecasts in a warning about inflation and the impacts of the Ukraine war. They now see GDP growing 3.6% this year from 4.4%.
One forecast that was surprisingly firm was China, where growth is forecast at 4.4% from 4.8% in January's report. The risks to the downside are mounting as Shanghai struggles under lockdown. There were 19,442 cases reported yesterday, down from 21,395 the day before. Cases have spread to 70 cities.
Authorities are hoping to ease some lockdown measures starting Wednesday in an effort to boost factory production. Some operations are telling employees to sleep on site, including Tesla.
The aim is to limit transmission to quarantine facilities as soon as possible. In data this week, China retail sales fell by 3.5% in March.
There's a growing acknowledgement of the inability of companies to boost oil production quickly. Workers and steel casing are hard to come by and shale has been keeping production artificially high by tapping drilled-but-incompleted wells. That inventory is quickly running out and there hasn't been enough new drilling to offset it. Globally, investment has been too low to even sustain current demand.
