Oil dips as investors eye US crude release, China demand concerns

8 months ago 82

US sells 18 mln bbls crude from strategic reserves. Crude still set to rise for fourth straight week

Topics
Crude Oil Price | Oil prices slip

Reuters 

Oil futures eased for a second session on Friday on expectations that Washington may soon act to cool prices that remain above $80 per barrel, while movement curbs in China to rein in a COVID-19 outbreak weighed on fuel demand.

Brent crude futures fell 6 cents to $84.41 a barrel at 0427 GMT. U.S. West Texas Intermediate crude was down 21 cents, or 0.3%, at $81.91 a barrel.

China, the world's second-biggest oil consumer, has suspended some international flights and stepped up efforts to rein in a virus outbreak at Tianjin while the highly transmissible Omicron variant has spread to the northeastern city of Dalian.

Many cities, including Beijing, have also urged people to stay put during the Lunar New Year holiday, which could cool demand for transport fuel during a peak travel season.

The world's top oil importer also posted in 2021 its first annual decline in crude oil shipments in two decades as Beijing clamped down on the refining sector and drew down massive inventories, although traders expect imports to recover this year.

"Market is a bit toppish," said Avtar Sandu, a commodities manager at Phillip Futures in Singapore, adding that reports on the COVID-19 situation in China and the sale of strategic petroleum reserves (SPR) in the United States were a concern.

The U.S. Energy Department said on Thursday it had sold 18 million barrels of strategic crude oil reserves to six companies, including Exxon Mobil and a unit of refiner Valero Energy Corp.

Nevertheless, Brent and WTI prices are set to climb for a fourth week in a row, supported by supply and geopolitical concerns in Libya and Kazakhstan and a drop in U.S. crude inventories to 2018 lows.

Some investors are also optimistic that Omicron's impact on the global economy and oil demand will be short-lived.

Several banks have forecast oil prices to hit $100 a barrel later this year as demand is expected to outstrip supply.

"The short-term outlook still has many risks, but optimism is high that it will be short-lived," OANDA's analyst Edward Moya said in a note.

However, with oil prices above $80, there is growing political pressure for the White House to lobby OPEC+ to hit their production quotas, he said.

"Biden may resort to another SPR release and while that won't solve any problems, it could send WTI crude down to the $80 level," Moya said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Read Entire Article