Ana sayfa » Oil prices slid on US inventory increase and China COVID concerns

Oil prices slid on US inventory increase and China COVID concerns

Tightness in physical markets and slowdown in Chinese demand affect oil futures markets

by BUNKERIST

Oil prices slumped on Wednesday as industry data showed US crude inventories increased more than expected and on concerns that the jump in COVID-19 cases in top importer China will negatively impact fuel demand.

Brent crude futures fell 44 cents, or 0.5%, to $94.92 as of 0454 GMT, while West Texas Intermediate (WTI) crude futures fell 53 cents, or 0.6%, to $88.38 a barrel.

Indicators fell about 3% on Tuesday.

In the week ended Nov. 4, US crude inventories rose by about 5.6 million barrels, according to data based on market sources’ American Petroleum Institute (API) figures. According to analysts, crude oil inventories were expected to increase by an average of 1.4 million barrels.

Last week, the market was pinned to hopes that China could move towards easing COVID restrictions, but over the weekend health officials said they would stick to “dynamic cleanup” approaches to new infections.

COVID cases in Guangzhou and other Chinese cities have increased, and the global manufacturing hub has become the country’s COVID epicenter.

Combined with the pushback anticipation of China reopening and the significant increase in US inventory data, declining US demand and economic recession become evident.

Despite the tightness in physical markets, the slowdown in Chinese demand is having a significant impact on the oil futures markets.

In another sign, API data showed gasoline inventories increased by about 2.6 million barrels versus analysts’ estimates of a 1.1 million decline.

The market will await official US inventory data from the ABD Energy Information Administration (EIA), which will be released today at 1530 GMT for a more detailed view of demand in the world’s largest economy.

Meanwhile, supply concerns persist as the European Union’s sanctions on Russian oil and the Organization of the Petroleum Exporting Countries and its allies’ cut production.

The EU will ban Russian crude oil imports until 5 December and Russian oil products until 5 February in retaliation for Russia’s invasion of Ukraine.