Oil set for steep weekly decline on worsening demand outlook

Oil was poised for a weekly loss of almost eight per cent as concerns over a softer demand outlook filtered through the market.

Demand for winter-delivery cargoes has slipped from Singapore to Houston, while the forward curve for both major crude benchmarks has weakened in a sign of ample supply. West Texas Intermediate edged up 0.6% on Friday, remaining near $82 a barrel after Thursday’s slump.

Oil futures are trading near their lowest level since September amid swelling Covid cases in China and aggressive monetary tightening by central banks. A deteriorating market for physical barrels has also weighed on prices. Crude is trading below several key moving averages, sparking so-called technical-based selling, against a backdrop of elevated speculative long positions. 

The European Union is poised for a ban on Russian seaborne crude imports starting early December, adding to an uncertain supply outlook for winter, though the market is “getting less scared of a Russian supply cliff,” said Keshav Lohiya, founder of consultant Oilytics. “Rising China Covid cases continue to spook the markets.”

Prices

  • WTI for December delivery gained 0.6 per cent to $82.16 a barrel at 9:49 a.m. London time
  • Brent for January settlement rose 31 cents to $90.09 a barrel

Coronavirus cases in China have climbed near their highest level of the pandemic, as authorities signal they’re preparing for even more infections. The increases will likely prove a test for any loosening of the country’s Covid rules.

© 2022 Bloomberg L.P. 

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