Oil prices fell on Friday as China, the world’s biggest crude importer, widened its Covid-19 curbs, but supply concerns rose ahead of Europe’s pending cutoff of Russian imports. But were ready to reap the benefits weekly.
Brent crude futures were down 78 cents, or 0.8 percent, at $96.18 a barrel at 0350 GMT after rising 1.3pc in the previous session. US West Texas Intermediate (WTI) crude futures were down $1, or 1.1pc, at $88.08 a barrel.
Still, both benchmark oil contracts were on course for weekly gains, with Brent heading for gains of more than 2pc and WTI more than 3pc.
Friday’s drop came as Chinese cities doubled down on Covid-19 containment on Thursday, sealing off buildings, locking down districts and stranding millions of people in a struggle to contain the spreading outbreak.
China reported 1,506 new Covid-19 infections on Oct. 27, the National Health Commission said Friday, up from 1,264 new cases a day earlier.
The International Monetary Fund expects China’s growth to slow to 3.2 percent this year, down 1.2 percentage points from its April forecast, after expanding 8.1 percent in 2021.
“The oil market has benefited from a weaker dollar and hopes for a strong economic recovery in China, but attention is now shifting to recessionary risks that could dampen forecasts for the outlook for crude demand for the rest of the year.” have been,” said Edward Moya, Sr. Market Analyst at Onda.
However, analysts said a sharp recovery in U.S. gross domestic product in the third quarter reported on Thursday highlighted the resilience of the world’s largest economy and oil consumer.
“From an oil market perspective – despite high interest rates – it’s a direct driver of your demand outlook,” said Baden-Moore, head of commodities research at National Australia Bank.
The market is likely to be volatile with low global inventories, European sanctions on Russian crude due to take effect in December, and rising Chinese demand, he said.
The wider premium for Brent over WTI was fueled by signs of increased refinery runs in China, Europe’s appetite for crude oil ahead of Russia’s oil embargo, and pending talks by the Organization of the Petroleum Exporting Countries (OPEC) and allies. Being affected by supply cuts.
“The market remains wary of looming deadlines for European purchases of Russian crude ahead of sanctions on December 5,” ANZ Research analysts said in a note.
