NEW YORK: Oil prices slid about 2% on Friday after top crude importer China widened its COVID-19 curbs, though the crude benchmarks were poised for a weekly gain on supply concerns and surprisingly positive economic data.
Brent futures fell $1.70, or 1.8%, to $95.26 a barrel by 11:18 a.m. EDT (1518 GMT), while U.S. West Texas Intermediate (WTI) crude fell $1.64, or 1.8%, to $87.44.
That put Brent on track to rise about 2% for the week and WTI up about 3%.
U.S. gasoline futures dropped almost 8%, while U.S. diesel futures rose about 2% to their highest since mid June.
“Diesel (was) still (the) strongest component of complex as shorts being squeezed out of the November contract ahead of Monday expiry,” analysts at energy consulting firm Ritterbusch and Associates said.
Friday’s crude price declines came after Chinese cities ramped up COVID-19 curbs on Thursday, sealing up buildings and locking down districts in a scramble to halt widening outbreaks.
China registered 1,506 new COVID infections on Oct. 27, the National Health Commission said on Friday, up from 1,264 new cases a day earlier.
The International Monetary Fund expects China’s growth to slow to 3.2% this year, a downgrade of 1.2 points from its April projection, after an 8.1% rise in 2021.
Brent oil may retrace towards $94.54-$94.89 range
“It’s hard to make a case for a rebound in China’s crude purchases given the backdrop of uncertainty over its zero-COVID policy,” said PVM Oil analyst Stephen Brennock.
PetroChina, however, said China’s demand for refined fuel and natural gas was set to grow year-on-year in the fourth quarter in tandem with an expected economic recovery as Beijing rolls out more stimulus policy.
Also limiting losses was a strong rebound in U.S. gross domestic product (GDP) in the third quarter, highlighting the resilience of the world’s largest economy and oil consumer.
U.S. GDP increased at a higher than expected 2.6% annualised rate, Thursday’s data showed, after a 0.6% contraction in the previous quarter.
The German economy also grew unexpectedly in the third quarter, data showed on Friday, as Europe’s largest economy kept recession at bay for now despite high inflation and concerns over energy supply.
Supply concerns ahead of a looming European ban on Russian crude imports also supported prices.
“The market remains wary of the impending deadlines for European purchases of Russian crude before the sanctions kick in on 5 December,” ANZ Research analysts said in a note.
Global oil-and-gas giants including Exxon Mobil, Chevron and Equinor posted huge profits in the third quarter, benefiting from surging energy costs that have boosted inflation around the world and hit consumers hard.
Those soaring profits are feeding growing criticism from consumer groups in the United States and Europe. U.S. President Joe Biden has told oil companies they are not doing enough to bring down energy costs.
The Organization of the Petroleum Exporting Countries (OPEC), meanwhile, is likely to maintain its view world oil demand will rise for another decade.