Oil Down Over U.S. Price Cooler Measures, Weaker Chinese Fuel Demand

© Reuters.

By Gina Lee – Oil was down on Friday morning in Asia over concerns that the U.S. would implement measures to cool prices, and that the latest COVID-19 outbreaks in China could dent fuel demand in the country.

were down 0.18% to $28.09 by 10:24 PM ET (3:24 AM GMT) and crude oil were down 0.38% to $81.66. However, both Brent and WTI futures are set to climb for a fourth consecutive week, with the black liquid supported by a tight supply market in Libya and Kazakhstan as well as a fall in U.S. crude inventories to 2018 lows.

Meanwhile, China, the world’s second-largest oil consumer, re-imposed stricter measures in response to the latest COVID-19 outbreaks. The omicron COVID-19 variant has spread from the city of Tianjin to Dalian.

Many cities, including Beijing, are urging people to stay home during the upcoming Chinese New Year holidays. Given that this is normally a peak travel season, some investors were concerned about fuel demand.

“Market is a bit toppish,” Phillip Futures commodities manager Avtar Sandu said to Reuters. He added that the COVID-19 situation in China and the sale of strategic petroleum reserves (SPR) in the U.S. were a concern.

Meanwhile, the U.S. Energy Department said it had sold 18 million barrels of strategic crude oil reserves to six companies, including Exxon Mobil (NYSE:).

Other investors are optimistic that the impact of omicron on the global economy could be short-lived.

“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. But when oil prices were above $80 a barrel, the pressure for the White House to act and lobby Organization of the Petroleum Exporting Countries and allies (OPEC+) to meet their production quota, he added.

“U.S. President Joe 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,” said Moya.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.


Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.