Tuesday saw a decline in oil prices as growing COVID-19 cases in China increased worries about decreased gasoline use from the top crude importer in the world.
After finishing 3% down on Monday, Brent oil futures dropped 78 cents, or 0.84%, to $92.36 a barrel at 1225 GMT. U.S. West Texas Intermediate crude dropped by 92 cents, or 1.07%, to $84.95 on Monday. Analysts liked comments this week that China is softening the impact of its strict zero-tolerance policy to boost economic activity and energy consumption, but said the lockdowns and rising cases pose major downside risks. Reduce.
Can the Oil Market Cause a Slowdown?
According to Tamas Varga of oil trader PVM, rising COVID instances in Beijing and other cities served as a reminder that a shift in the trend of economic and oil use growth in the world’s largest oil importer is anything but imminent. Tuesday saw an increase in COVID instances around the nation, notably in Beijing, and a slowdown in the development of the nation’s industrial production.
Due to the continued COVID limitations, investment bank JPMorgan (NYSE: JPM) on Tuesday lowered its quarterly and annual predictions for economic growth in China. The Organization of the Petroleum Exporting Countries (OPEC), citing escalating economic difficulties like high inflation and rising interest rates, lowered its prediction for increasing the world’s oil use in 2022 for the sixth time since April. Earlier in the day, Brent and WTI fell by more than a dollar, although they recovered some losses due to worries about supply shortages this winter.
The International Energy Agency reported on Tuesday that 1.1M barrels per day (BPD) would need to be replaced due to a European Union embargo on Russian seaborne oil, which should take effect on December 5. The Agency has increased its prediction for this year’s oil demand.
A poll revealed on Monday, ahead of findings from the American Petroleum Institute scheduled at 4:30 p.m. ET (2130 GMT) on Tuesday, that U.S. crude oil stockpiles should have dropped by approximately 300,000 barrels in the week to November 11.