Oil falls as China’s struggle with COVID blights demand outlook

Image: BP

Oil extended declines after the biggest weekly drop since August as China tightened anti-COVID curbs, hurting the outlook for demand.

WTI for December delivery, which expires Monday, declined 0.6 per cent to $79.59/bbl on the New York Mercantile Exchange. The more-active January contract was 0.7 per cent lower.

Brent for January settlement eased 0.8% to $86.92 a barrel on the ICE Futures Europe exchange at 1 p.m. in London.

Goldman Sachs Group Inc. lowered its fourth-quarter forecast for Brent crude by $10 to $100/bbl, according to a note, with the reduction driven in part by the possibility of further anti-virus measures in China as cases climb.

Crude has erased the gains made at the start of the quarter, when OPEC+ agreed to reduce production by two million bbls/d. A looming European Union ban on Russian seaborne flows and G7 price-cap plan are clouding the outlook, with officials possibly set to announce the cap’s level on Wednesday as they step up their response to Moscow’s invasion of Ukraine.

“Potentially new mobility restrictions in China along with high Russian crude exports” are pushing prices lower, said Giovanni Staunovo, commodity analyst at UBS Group AG. OPEC production cuts and solid demand in the U.S. ahead of the Thanksgiving holiday may help temper the price drop, he said.

© 2022 Bloomberg L.P.

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.