Oil prices slip on lower fuel demand by China

London — Oil prices edged lower on Tuesday on fears of an economic slowdown and lower fuel demand from China as it persists with its stringent zero-Covid-19 policy.

Brent crude futures fell 41c, or 0.45%, to $91.21 a barrel by 9.48am GMT while US West Texas Intermediate (WTI) crude futures fell 41c, or 0.48%, to $85.05.

WTI had risen earlier by more than $1 a barrel on a weaker dollar, which makes oil cheaper for buyers holding other currencies. But the dollar index measuring the greenback against six peers rose later in the session, weighing on oil prices in early European trading.

Also in focus was the Bank of England’s plan to start selling the vast government bond holdings it amassed during the coronavirus crisis. That sent long-dated yields higher, indicating increased risks to financial stability.

Meanwhile, China’s fuel demand outlook weighed on sentiment after the world’s top crude oil importer delayed release of economic indicators originally scheduled to be published on Tuesday, CMC Markets analyst Tina Teng said. No date was given for a rescheduled release.

China’s adherence to its zero-Covid-19 policy has continued to increase uncertainties about the country’s economic growth, Teng said.

On the supply side, US crude oil stocks were expected to have risen for a second consecutive week and are estimated to have increased by 1.6-million barrels in the week to October 14, a preliminary Reuters poll showed on Monday.

Output in the Permian Basin of Texas and New Mexico, the biggest US shale oil basin, is forecast to rise by about 50,000 barrels per day (bpd) to a record 5.453-million bpd in October, the Energy Information Administration said. 

Reuters