United States: Oil prices fell 4% in Tuesday's erratic trade as a result of weak Chinese demand data, weak economic outlook and a stronger dollar.

Brent futures for March delivery experienced their biggest daily decline in more than three months as they fell $3.81, or 4.4%, to $82.10 a barrel.

Crude experienced its biggest decline in more than a month as it fell $3.33 to $76.93 a barrel, a loss of 4.1%. Both the benchmarks had gained a dollar per barrel at the start of the session.

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According to Mizuho analyst Robert Yoger, there are several reasons to be concerned about this situation, including the COVID-19 situation in China and the expectation of an impending recession.

For the first batch of 2023, the Chinese government extended the export quota for goods made from refined oil. The rise was attributed by traders to anticipation of weaker domestic demand as the world's biggest crude importer battles waves of infections.

Factory activity in China eased in December after Beijing largely lifted anti-virus restrictions as rising infections disrupted production and weighed on demand.

IMF Managing Director Kristalina Georgieva said on Sunday that the world economy would face more challenges in 2023 than in 2022 as the economies of the United States, Europe and China were slowing down at the same time.

The dollar experienced its biggest one-day gain in more than two weeks. A stronger dollar could hamper oil demand as dollar-denominated goods become more expensive for holders of other currencies.

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Markets will review the US Fed's December policy meeting minutes on Wednesday. After four consecutive increases of 75 basis points, the Fed raised interest rates by 50 bps in December.

In the week to December 30, oil stocks at Cushing storage hubs rose by about 176,000 barrels to 28.6 million barrels, according to a broker citing Genscape data. Crude volumes were predicted to increase by 2.2 million last week.

On the supply side, the US government last week released 2.7 million barrels of oil from strategic petroleum reserves, and the Pascagoula, Mississippi, refinery of oil giant Chevron Corp (CVX.N) is about to receive its first shipment of Venezuelan crude in nearly 4 years. .

According to the most recent government projections, US crude production will rise by an average of 620,000 barrels per day in 2023, about a third less than the 1 million bpd some forecasters predicted at the start of the year. See more

Commerzbank predicted that the global economic outlook would affect oil price changes "much more significantly" than the Organization of the Petroleum Exporting Countries (OPEC) and its allies, also known as OPEC+ .

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The bank predicted that, in the second quarter of the year, signs of economic recovery "in key economic sectors" would push Brent back towards $100 a barrel.