Top Stories
Oil drops for fourth day on China demand concerns
Global Banking & Finance Review®
Company
By Alex Lawler
LONDON (Reuters) -Oil extended losses on Thursday for a fourth consecutive session as renewed COVID curbs in China raised concern about fuel demand in the world’s biggest crude importer.
China is battling a rebound in infections in several economically vital cities, including the capital Beijing. In the manufacturing hub of Guangzhou, millions of residents were told to get tested for COVID-19 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 ban on Russian oil and G7 price cap looming, he added.
Brent crude was down 68 cents, or 0.7%, to $91.97 a barrel at 1100 GMT. U.S. West Texas Intermediate (WTI) crude fell $1.07, or 1.3%, at $84.76.
“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 undertaken,” said Craig Erlam of brokerage OANDA.
Crude surged earlier this year as Russia’s invasion of Ukraine raised concern about supply, with Brent coming close to its all-time high of $147. Prices have since fallen on concern of recession and Brent has dropped more than 6% this week.
The market came under pressure on Wednesday from a big rise in U.S. crude inventories. They rose by 3.9 million barrels, taking inventories to their highest since July 2021.
With no final results yet available from the U.S. mid-term elections, in focus later on Thursday will be U.S. inflation data which is likely to show a slowing in both the monthly and yearly core numbers for October, according to a Reuters poll.
That may lead the U.S. Federal Reserve to reduce the size of its planned interest rate increases, which would be considered positive for economic and oil demand growth.
(Additionalreporting by Sonali Paul in Melbourne and Muyu Xu in Singapore; Editing by Mark Potter and Susan Fenton)
Crude oil is a natural, unrefined petroleum product composed of hydrocarbon deposits and other organic materials. It is extracted from the ground and refined into various fuels and other products.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI) or Producer Price Index (PPI).
Crude oil inventory refers to the amount of crude oil stored in tanks and facilities, which is monitored to gauge supply levels and predict price movements in the oil market.
Brent crude is a major trading classification of crude oil originating from the North Sea, used as a benchmark for pricing oil globally. It reflects the price of oil in the European market.
Explore more articles in the Top Stories category
