Summary
- Millions in Chinese manufacturing hub get tested for COVID
- S. crude oil stockpiles surge more than forecast
- Coming up: U.S. inflation data
Oil boosted losses on Thursday for a fourth successive session as renewed COVID restrictions in China sparked concern about fuel demand in the world’s largest crude importer.
China is fighting a rebound of the virus in several economically key cities, including the capital Beijing. In the manufacturing hub of Guangzhou, millions of residents were told to take COVID-19 tests on Wednesday.
“Chinese COVID-related demand woes, the reinvigorated dollar, and a loose fourth-quarter oil balance could push prices further south,” said Tamas Varga of oil broker PVM.
The downside could be limited with the European Union sanctions on Russian oil and the G7 price cap impending, he added.
Brent crude fell 0.3%, or 29 cents, to $92.36 a barrel at 1120 GMT. U.S. West Texas Intermediate (WTI) crude slid 0.6%, or 50 cents, to $85.33.
Craig Erlam of brokerage OANDA said:
“While the narrative in recent weeks has focused on the potential for Chinese COVID restrictions to be relaxed… the reality has seen case numbers soaring, restrictions reimposed and mass testing is undertaken.”
Crude rose earlier in 2022 as Russia’s war in Ukraine sparked concern about supply, with Brent approaching its record high of $147. Prices have since plunged on fears of recession and Brent has fallen more than 6% this week.
The market faced pressure on Wednesday from a big increase in U.S. crude inventories. They grew by 3.9 million barrels, taking inventories to their highest since July last year.
Buy Crypto NowWith no results yet ready from the U.S. mid-term elections, in focus later on Thursday will be U.S. inflation data which will probably show a decline in both the monthly and yearly core numbers for October, according to a Reuters poll.
That may prompt the U.S. Federal Reserve to lower the scale of its planned interest rate hikes, which would be deemed positive for economic and oil demand growth.
