Oil dips as worry about geopolitical tension wanes

London — Oil slipped on Thursday, pressured by easing concerns over geopolitical tension and Chinese demand worries, though signs of tighter supply including lower US inventories lent support.

Poland and Nato said on Wednesday that a missile that crashed inside Nato member Poland was probably a stray fired by Ukraine’s air defences and not a Russian strike, easing the fear of the war between Russian and Ukraine spilling across the border.

“It looks like we aren’t seeing an immediate escalation from the Russians and that has tentatively removed some of the short-term supply risks,” said Edward Moya, senior market analyst at Oanda.

Brent crude was down 43c, or 0.5%, to $92.43 a barrel at 9.14am GMT. US West Texas Intermediate (WTI) crude also slid 43c, or 0.5%, to $85.16.

Concern about weak demand in China, the world’s largest crude importer, also weighed on the market.

China on Thursday reported rising daily Covid-19 infections. Chinese refiners have asked to reduce Saudi crude volume in December, Reuters has reported, and are also slowing Russian crude purchases.

“Struggling Chinese consumption is embodied in sinking domestic need for both Russian and Saudi crude oil,” said Tamas Varga of oil broker PVM.

While China’s Covid-19 caseload is small compared with the rest of the world, it maintains stringent policies to quash out cases before they further spread, dampening fuel demand.

Oil gained some support from official figures that US crude stocks fell by more than 5-million barrels in the most recent week, more than analysts had forecast.

Supply is also tightening in November as oil cartel Opec and its allies, known as Opec+, implement their latest output cut aimed at supporting the market.

Reuters