By Barani Krishnan

Investing.com — Crude prices tumbled 2% Tuesday while staying above the key $100 per barrel support as market participants fretted again about China’s ability to keep its economy on track and retain the massive oil imports that have made it the largest consumer of the commodity, overtaking the United States.

Beijing, facing dozens of new Covid cases daily, is mass-testing residents to avert a lockdown similar to Shanghai’s over the past month, Reuters reported, adding that the capital’s restaurants were closed for dining in, and some apartment blocks were sealed shut.

The renewed concerns over China came as the European Union remained undecided on instituting a ban on Russian oil in response to Moscow’s more than two-month old invasion of Ukraine. A European embargo against Russian oil could cause crude prices to reach new highs. They would be close to the $140 mark that was reached right after the invasion.

Crude, the London-traded benchmark oil price, fell 2.2% to $105.16 per barrel at 2:21 PM (18:21 GMT). The price dropped to $104.66 in the previous session.

New York-traded WTI or U.S. crude was 2.5% lower at $102.58, or $2.59 after a session low near $102.12.

The slump in crude prices occurred despite the trade’s expectations that U.S. inventories of crude to fuel fell last week — an event that typically would have sent prices higher.

“Crude prices are declining as Beijing tightens up their Covid controls and as tanker-tracker data showed Russian crude flows increased,” said Ed Moya, analyst at online trading platform OANDA. “Energy traders are not convinced that the EU will be able to move forward with an embargo on Russian oil.”

China worries aside, traders are awaiting the Federal Reserve’s on Wednesday, where the central bank is likely to impose a 50-basis, or half-percentage, point rate hike — its most in over 20 years — as it aims to quell the worst U.S. inflation in four decades.

Oil’s downside, however, appeared limited by Thursday’s impending meeting of the OPEC+, the global oil exporters’ alliance, which is determined to keep a barrel at or above $100.

OPEC+ had pushed up crude prices at each of its meetings over the past year by offering a meager hike of 400,000 barrels per day in monthly production to a supply-starved market rebounding from the Covid 2020 disruptions — and then not even fulfilling that.

“OPEC+ seems poised to rubber stamp next month’s output increase target that they probably won’t hit,” Moya said.

Ahead of the Fed on Wednesday and OPEC+ on Thursday, there is the first the U.S. weekly oil inventory data, due after Tuesday’s market settlement from the API, or the American Petroleum Institute.

At approximately 4:30PM ET (20:30 GMT), the API will publish a snapshot showing U.S. crude oil, gasoline and distillates closing balances for the week ending April 29, 2018. These numbers are used as an indicator of the official inventory data due by the U.S Energy Information Administration (USEIA) on Wednesday.

Investing.com has tracked analysts who expect that the EIA will report a decrease of 1.17million barrels in the last week, compared to the 692,000 barrel increase reported last week.

Surprisingly, there is consensus for a draw to 250,000 barrels in order to offset the decline of 1.57-million barrels the previous week.

With , the expectation is for a drop of 1.17 million barrels versus the prior week’s deficit of 1.45 million.