Crude extends losses as China renews Covid curbs

London — Oil extended its losses for a fourth straight session on Thursday as renewed Covid-19 curbs in China raised concern about fuel demand in the world’s biggest crude importer.

China is battling a rebound in infections in several important cities, including the capital Beijing. In the manufacturing hub of Guangzhou, millions of residents were told to get tested for Covid-19 on Wednesday.

“Chinese Covid-related demand woes, the reinvigorated dollar and a loose fourth-quarter oil balance could push prices further south,” said Tamas Varga of oil broker PVM. The downside could be limited with the EU ban on Russian oil and G7 price cap looming, he added.

Brent crude was down 27c, or 0.3%, to $92.38 a barrel at 9.03am GMT. West Texas Intermediate was down 33c, or 0.4%, at $85.50.

“While the narrative in recent weeks has focused on the potential for Chinese Covid restrictions to be relaxed … the reality has seen case numbers soaring, restrictions reimposed and mass testing undertaken,” said Craig Erlam of brokerage Oanda.

Crude surged earlier this year as Russia’s invasion of Ukraine raised concern about supply, with Brent coming close to its all-time high of $147 a barrel. Prices have since fallen on concern about recession and Brent has dropped more than 6% this week.

The market came under pressure on Wednesday from a big increase in US crude inventories, which rose by 3.9-million barrels, taking stockpiles to their highest since July 2021.

With no final results yet available from the US midterm elections, in focus later on Thursday will be inflation data which is likely to show a slowing in both the monthly and yearly core numbers for October, according to a Reuters survey.

That may lead the Federal Reserve to reduce the size of its planned interest rate increases, which would be considered positive for economic and oil demand.

Reuters