Ana sayfa » Oil prices fall amid threat of low Chinese demand

Oil prices fall amid threat of low Chinese demand

Recession worries outweigh supply woes

by BUNKERIST

Oil prices fell on Tuesday as recession concerns and worsening COVID-19 outbreaks in China fueled fears of low fuel demand outweighing supply concerns.

Brent crude fell 31 cents, or 0.3%, to $97.61 a barrel, while West Texas Intermediate (WTI) crude fell 36 cents, or 0.4%, to $91.43 a barrel.

Both benchmarks hit their highest level since August on Monday amid reports that leaders in China, the world’s largest importer of crude oil, are weighing an exit from the country’s stringent COVID-19 restrictions.

However, over the weekend, Chinese health officials reiterated their commitment to China’s strict zero-COVID policy. In addition, the latest data showed that the country’s exports and imports unexpectedly contracted in October.

According to official data released on Tuesday, COVID cases have climbed sharply in Guangzhou and other major Chinese cities. The global manufacturing hub is battling its worst-ever boom.

The ongoing lockdowns are not only shaking the long-term oil market but continue to push back the narrative of the opening up of oil prices negatively.

A stronger dollar also weighed on oil prices. Oil is usually priced in US dollars, so a stronger dollar makes commodities more expensive for holders of other currencies.

Market participants will be watching US CPI data this week for trade clues. Due to sticky inflation and rising interest rates in major western countries, oil futures are still priced in the possibility of a global recession.

These are the reasons for the pullback in oil futures prices over the past few months, along with the slowdown in fuel demand in China.

In retaliation for Russia’s invasion of Ukraine, the European Union’s ban on Russian oil will begin on December 5, followed by a halt to imports of petroleum products in February.

U.S. crude inventories are expected to rise by about 1.1 million barrels last week, according to a preliminary survey on Monday. The survey was conducted ahead of the American Petroleum Institute’s (API) reports at 2130 GMT on Tuesday and the Energy Information Administration’s (EIA) at 1530 GMT on Wednesday.