(CTN News) – Tuesday saw a decline in oil prices as worries about the economy and the growing Covid-19 outbreaks in China outweighed concerns about supply.
By 0434 GMT, Brent oil Prices had decreased by 31 cents, or 0.3%, to $97.61 per barrel, while US West Texas Intermediate (WTI) crude had decreased by 36 cents, or 0.4%, to $91.43 per barrel.
On Monday, both benchmarks reached their highest levels since August after news that China, the major importer of crude oil, was considering relaxing its rigorous Covid-19 regulations.
However, Chinese health authorities reiterated China’s dedication to its stringent zero-Covid policy over the weekend. Additionally, recent statistics revealed that imports and exports of the nation unexpectedly decreased in October.
According to Tuesday’s official statistics, the number of covid cases rapidly increased in Guangzhou and other significant Chinese cities. The global industrial powerhouse is now battling its greatest flare-up ever, putting its capacity to avoid a citywide shutdown à la Shanghai to the test.
According to Stephen Innes, managing partner of SPI Asset Management, “I believe the rolling lockdowns, not to mention doubling down on zero-Covid over the weekend, are not only unsettling the long-positioned oil market but also continue to push back the reopening narrative adversely for oil prices.”
A stronger dollar also impacted oil prices. Since oil is often priced in US dollars, a stronger dollar increases the cost of the commodity for owners of other currencies.
According to CMC Markets analyst Tina Teng, market players will watch this week’s US CPI data for trade indications.
“Oil futures are still pricing in the potential of a worldwide economic recession based on sticky inflation and increasing interest rates in key western nations,” said Teng.
The decline in oil prices in Future over the last several months is due to this and a slowdown in China’s gasoline consumption.
But while attention shifts back to supply concerns, the fundamentals for oil in the short term continue to be optimistic, according to ANZ Research analysts.
The market must act before European imports of Russian oil are prohibited by sanctions, according to ANZ.
In punishment for Russia’s invasion of Ukraine, the European Union has banned the import of Russian oil, which is planned to begin on December 5 and end in February. “A unique operation,” according to Moscow, is what it is doing in Ukraine.
According to a preliminary Reuters poll released Monday, US crude oil inventories should have increased by approximately 1.1 million barrels last week.
The survey was performed before Tuesday, 4:30 p.m. ET, due to reports from the American Petroleum Institute and the 10:30 a.m. ET, due to reports from the Energy Information Administration.
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