Oil stagnant as economic concerns likely China demand growth
Oil prices were little changed on Friday as worries about weak economic growth offset expectations that China could see a jump in crude demand as Shanghai lifts some of the coronavirus lockdowns.
Brent futures for July delivery fell 36 cents, or 0.3%, to $111.68 a barrel by 0015 GMT, while US West Texas Intermediate (WTI) crude fell 36 cents, or 0.3%, to $111.85.
WTI futures for July, which will soon be the first month, fell nearly 0.6% to $109.20 a barrel.
This put WTI on track to rise for the fourth consecutive week for the first time since mid-February. Brent was up less than 1% after falling less than 1% last week.
Crude oil’s gains have remained limited this week, with Brent and US benchmarks trading mostly in a range bounded by an uncertain trajectory of demand. Investors worried about rising inflation and more aggressive action by central banks are reducing exposure to riskier assets.
For example, open interest in WTI futures fell to 1.722 million contracts on 18 May, the lowest since July 2016.
“If US growth data continues to sour, oil prices could be caught in a negative stock market feedback loop,” Stephen Innes, managing director of SPI Asset Management, said in a client note.
Wall Street ended lower on Thursday after a volatile session, while investors worried about inflation and rising interest rates.
In China, however, demand for oil could improve as Shanghai officials lifted some coronavirus lockdowns and residents were given the freedom to go out to buy groceries for the first time in nearly two months. China is the world’s top crude importer.
In the United States, Americans were getting back behind the wheel, despite high fuel prices, according to a report from the Federal Highway Administration on vehicle miles.
Automobile club AAA said petrol and diesel prices at the pumps again hit record highs on Thursday.
The US House passed a bill that allows the president to issue an energy emergency declaration, making it illegal for companies to exorbitantly increase the prices of gasoline and household fuels.
The rising prospect of a sanctions on Russian oil imports by the European Union has helped support prices. The European Union this month proposed a new package of sanctions against Russia over its invasion of Ukraine, which Moscow calls a “special military operation”.
Those sanctions would include a complete ban on oil imports in six months’ time, but the measures have yet to be adopted, with Hungary among the plan’s most vocal critics.
Meanwhile, Iran is now finding it difficult to sell its crude as more Russian barrels are available.
Iran’s crude exports to China have fallen sharply since the start of the Ukraine war as Beijing favored heavily discounted Russian barrels, allowing about 40 million barrels of Iranian oil to be stored on tankers at sea in Asia and buyers. was searched for.
The prospect of oil demand growth in China on stagnant economic concerns first appeared in the International Business Times.
