Crude Oil trades substantially lower after several headwinds emerged on Tuesday.
The Libyan outage is set to be resolved, while recession fears in China and Europe weigh on the demand outlook.
The US Dollar Index trades above 101.00 ahead of the US Jobs Report on Friday.
Crude Oil struggles for support around $70.00 on Wednesday, extending losses after the 5% drop on Tuesday left Oil trading at its lowest level this year so far. Several headlines that came out on Tuesday were just too much to bear for Oil traders, sending the black fuel in a selloff spin. The headwinds are double-fold, taking place both on the demand side and on the sell side of the equation.
On the demand side, recent Purchasing Managers Index data out of China showed another severe slowdown in its manufacturing sector, which means more sluggish demand for Oil ahead. Meanwhile in Europe, one of Germany’s core companies, Volkswagen, has announced plans to close several factories in its native homeland, a sign on the wall that Europe could be facing a severe recession. On the supply side, OPEC is steaming ahead with its intention to normalize output, while the political impasse in Libya is nearly resolved and might see Libyan Oil heading back to markets quicker than expected.
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