Oil prices slumped about 1% on Friday after top crude importer China widened its COVID-19 measures, but crude gauges are poised for weekly gains amid supply concerns and surprisingly strong economic data.
Brent futures were down $1.19, or 1.2%, to settle at $95.77 a barrel. West Texas Intermediate (WTI) crude fell $1.18, or 1.3%, to $87.90.
US gasoline futures fell about 3%, while US diesel futures rose about 5% to their highest level since mid-June.
For the week, Brent is up about 2% and WTI is up about 3%.
The National Health Commission said Chinese cities increased their COVID-19 restrictions on Thursday, locking some buildings and districts, after registering 1,506 new COVID infections on Oct.
The International Monetary Fund (IMF) expects China’s growth to slow to 3.2% this year, down 1.2 percentage points from its April forecast after an 8.1% increase in 2021.
Given the uncertainty regarding the zero-COVID policy, it is difficult to present a rationale for the recovery in China’s crude oil purchases.
PetroChina said China’s demand for refined fuel and natural gas will increase year-on-year in the fourth quarter, with the expected economic recovery as Beijing implements more stimulus policies.
The strength in the US and Chinese economy has limited oil losses.
Thursday’s data showed a strong recovery in US gross domestic product (GDP) in the third quarter, indicating resilience in the world’s largest economy and oil consumer.
The Bank of England is preparing for the biggest rate hike in 33 years. Eurozone sentiment fell to a two-year low in October.
Germany, Europe’s largest economy, also grew unexpectedly in the third quarter, data released on Friday showed. High inflation and energy supply concerns are adding to the recession ahead of Europe’s upcoming ban on crude oil imports from Russia.
The market remains cautious regarding the approaching deadlines for European purchases of Russian crude before sanctions begin on December 5.
Global oil and gas giants such as Exxon Mobil, Chevron and Equinor made huge profits in the United States in the third quarter. US President Joe Biden has warned oil companies that they are not doing enough to cut energy costs.
The number of U.S. oil and gas rigs fell this week, and October didn’t increase monthly for the first time since July, according to Baker Hughes.
The Organization of the Petroleum Exporting Countries (OPEC) maintains its view that world oil demand will increase for another decade.
