Oil extended losses on Thursday for a fourth consecutive session as renewed COVID curbs in China raised concern about fuel demand in the world’s biggest crude importer.
China is battling a rebound in infections in several economically vital 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 European Union ban on Russian oil and G7 price cap looming, he added.
Brent crude was down 27 cents, or 0.3%, to $92.38 a barrel at 0903 GMT. U.S. West Texas Intermediate (WTI) crude was down 33 cents, 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. Prices have since fallen on concern of recession and Brent has dropped more than 6% this week.
The market came under pressure on Wednesday from a big rise in U.S. crude inventories. They rose by 3.9 million barrels, taking inventories to their highest since July 2021.
With no final results yet available from the U.S. mid-term 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 poll.
That may lead the U.S. Federal Reserve to reduce the size of its planned interest rate increases, which would be considered positive for economic and oil demand growth.