Oil slips further on demand, financial market worries

© Reuters. FILE PHOTO: A sticker reads crude oil on the side of a storage tank in the Permian Basin in Mentone, Loving County, Texas, U.S. November 22, 2019. REUTERS/Angus Mordant

By Laura Sanicola

(Reuters) - Oil prices edged lower in early Asian trade on Tuesday, adding to a 6% slump in the previous session, as coronavirus lockdowns in top oil importer China and potential economic ructions in Europe fed worries about the demand outlook.

Brent crude fell 36 cents, or 0.3%, to $105.58 at 0009 GMT. U.S. West Texas Intermediate crude fell 23 cents, or 0.2%, to $102.86 a barrel. Prices dropped over $1 earlier in the session but pared their losses. Both contracts are still up about 35% so far this year.

Financial markets are heeding concerns that further curtailing Russian oil imports following the nation's invasion of Ukraine could push some European nations into economic distress.

Last week, the European Commission proposed a phased embargo on Russian oil, boosting Brent and WTI prices for a second straight week. The proposal needs a unanimous vote by EU members this week to pass.

A halt to Russian gas supplies to Germany would trigger a deep recession and cost half a million jobs, a senior economist said in an interview published on Tuesday.

The country's officials are quietly preparing for any sudden halt in Russian gas supplies with an emergency package that could include taking control of critical firms, Reuters reported.

Hungary has also restated its position that it will not accept a new round of proposed sanctions on Russia until its concerns are addressed.

Global financial markets have also been spooked by concerns over interest rate hikes and recession worries as tighter and wider COVID-19 lockdowns in China led to slower export growth in the world's No. 2 economy in April.

Crude imports by China in the first four months of 2022 fell 4.8% from a year ago, but April imports were up nearly 7%.

Wall Street stock indexes fell on Monday and the dollar hit a two-decade high, making oil more expensive for holders of other currencies.