Oil lost more on Thursday as concerns about China’s renewed COVID curbs raised concerns about fuel consumption in the world’s largest crude importer.
China is facing a rebound of infections in many economically important cities, including Beijing. Millions of Guangzhou residents were instructed to undergo COVID-19 testing on Wednesday.
According to Tamas Varga, an oil broker at PVM, “Chinese COVID-related demands, the reinvigorated dollars and a looser fourth-quarter oil account could push prices further south.” He said that the downsides could be limited by the European Union’s ban on Russian oil and the G7 price limit.
Brent crude oil fell 0.3% to $92.36 per barrel at 1120 GMT. U.S. West Texas Intermediate crude (WTI), fell 50cs or 0.6% to $85.33.
Craig Erlam, a broker at OANDA said that while the media has been focusing on the possibility of Chinese COVID restrictions being relaxed, the reality has seen cases rise and restrictions reimposed as well as mass testing conducted.
As Russia invaded Ukraine earlier in the year, crude oil prices surged. Brent was close to $147, which is its highest point. Brent has fallen more than 6% since then, citing concerns about recession.
On Wednesday, the market was under pressure from a significant increase in U.S. crude inventory. They increased by 3.9 million barrels, bringing inventories to their highest level since July 2021.
There are no official results from the U.S. midterm elections. Instead, Thursday’s focus will be on U.S. inflation data. This data is expected to show a slowing of both monthly and yearly core numbers for October according to a Reuters poll.
This could lead to the U.S. Federal Reserve reducing the size of its planned interest rate increases. This would be a positive outcome for economic and oil demand growth.
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