Get 40% Off
💎 WSM is up +52.1% since our AI picked it in December! Unlock all premium stock picksUnlock now

Oil prices settle lower as surging COVID cases in China bite into demand optimism

Published 12/28/2022, 03:31 PM
Updated 12/28/2022, 03:51 PM
© Reuters.

© Reuters.

By Yasin Ebrahim 

Investing.com – U.S. crude oil prices settled lower Wednesday, as surging COVID-19 cases in China cast a shadow over the demand outlook amid Beijing's recent to move ease pandemic restrictions.

On the New York Mercantile Exchange crude futures fell $0.57 to settle at $78.96 a barrel, while on London's Intercontinental Exchange, Brent fell $1.07 to settle at $83.26 a barrel.

Just weeks after largely abandoning its zero-COVID policy, China, the largest crude importer in the world, is facing a spike in COVID infections. The wave of infections isn't only weighing on economic activity and travel, but keeping a lid on oil consumption and undermining recent bets on a reopening-led surge in demand.

China's reopening - hailed by some as a holy grail for demand - was expected to boost demand by the equivalent of 3.3 million barrels of oil a day next year, according to S&P Global's energy outlook report released earlier this month.

Expectations for a pick-up demand from China have helped oil prices recover from a slump in mid-December to one-year lows.

Beyond the fundamentals, some experts are flagging bearish technical indicators that point to further downward pressure on oil prices, which remain well below key support levels.

"The market remains well below its 55-Day Moving Average and 200DMA at 89.01 and 100.67, and with medium-term momentum declining and global growth concerns looming, we think further weakness is likely to follow," Credit Suisse said in a note, according to FXStreet.

The selloff comes ahead of data of the weekly snapshot on U.S. inventories from the American Petroleum Institute expected to show another draw in supplies following last week’s 3 million barrel decline.

API will issue at 16:30 ET (21:30 GMT) its log on U.S. crude, gasoline, and distillate stockpiles for the week ended Dec. 23. The figures serve as a precursor to the official weekly supply data due on Thursday from the EIA, or U.S. Energy Information Administration.

Latest comments

more crap spam from mason
Here comes the API report to crush your narrative.
Fake news. The spread would have happened by now over the YEARS now.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.