Oil prices calmed after falling for three days as the impact of renewed COVID restrictions on China, the world’s largest importer of crude oil, aggravated and traders await US inflation data that could prompt further rate hikes.
Brent crude futures were down 2 cents to $92.63 a barrel at 0534 GMT. West Texas Intermediate (WTI) crude futures fell 8 cents to $85.75 a barrel.
Brent prices are down more than 6% so far this week, while WTI is down more than 7%.
Guangzhou, a city of 19 million, reported more than 2,000 new cases on Thursday. Millions of residents were told to get tested for COVID-19 on Wednesday, and a city area has been on lockdown as local cases across China have reached their highest level since April 30.
The United States consumer price index (CPI) data will be released later on Thursday, which is expected to show a slowdown in both monthly and annual inflation rates. This could lead the US Federal Reserve to reduce the size of planned interest rate hikes, which would be considered positive for economic and oil demand growth.
The prices came under pressure after Wednesday’s massive spike in US crude inventories. Eventually, the outlook for oil prices has become more cautious. US CPI data will further affect market expectations at the macro level, which will further increase the wait-and-see sentiment of the market.
The U.S. Energy Information Administration (EIA) said crude inventories increased by 3.9 million barrels last week, putting inventories at the highest level since July 2021.
However, gasoline inventories fell by 900,000 barrels to the lowest level since November 2014, and distillate stocks fell by 500,000 barrels.
Distillate stocks, including diesel, heating oil, and jet fuel, have dropped to a decade low, marking conditions much tighter than the US oil or gasoline markets.
Brent is expected to average around $95 per barrel in the fourth quarter due to the tightening of oil markets following the implementation of the planned ban on Russian oil imports by sea on December 5 in response to the Russian invasion.
