Oil Drops On China Uncertainty; U.S. Demand Limits Decline
2 mins read
Published on December 30, 2022
Oil prices fell for a second straight session on Thursday on an uncertain demand outlook as more countries considered restrictions on Chinese travelers with COVID-19 infections spreading in the top oil-importing nation.
China's government is dismantling pandemic restrictions, yet a surge in infections there is prompting tougher travel rules on Chinese visitors in some countries.
Brent crude futures for February delivery fell by a dollar to settle at $82.26, down 1.2%. U.S. West Texas Intermediate crude futures settled at $78.40 per barrel, down by 56 cents, or 0.7%.
Britain is reviewing whether to impose restrictions on people arriving from China. The United States, Japan, India and Taiwan have already imposed testing on arrivals from the country.
"Crude is limping towards the end of the year in thin trading - uninspired by the lifting of COVID restrictions in China amid skyrocketing cases, with little to galvanize crude bulls or bears in today's benign EIA report," said Matt Smith, lead oil analyst at Kpler.
U.S. crude oil inventories rose unexpectedly last week as imports climbed and exports fell, the Energy Information Administration (EIA) said on Thursday. [EIA/S]
Despite the surprise build in crude oil stocks, the report itself was "positive" and showed a "solid rebound" in implied oil demand, resulting in large draws of refined products, said Giovanni Staunovo of Swiss bank UBS.
Both oil contracts dipped more than 2% early in Thursday's session, but pared losses as the U.S. dollar slipped, with investors on edge about interest rate hikes.
A weaker dollar makes oil cheaper for holders of other currencies.
"With so many moving parts, I don't think anyone can say anything with any strong degree of conviction," Craig Erlam, senior market analyst at OANDA, said. "OPEC+ could make an announcement at any point and suddenly everything changes. Not to mention Russia's war in Ukraine and how that develops."
Russia fired scores of missiles into Ukraine early on Thursday, targeting Kyiv and other cities in one of Moscow's largest aerial assaults since the war started.
Meanwhile, TC Energy Corp said the 622,000-barrel-per-day Keystone pipeline was now operational, weeks after a major oil spill in rural Kansas.
Shutdown of the line hit supplies in the U.S. and briefly lifted oil prices, although there was little change to either benchmark after settlement.
(This story has been corrected to show WTI settled down 56 cents, not $1.13, in the third paragraph)
(Reporting by Shariq Khan; additional reporting by Rowena Edwards and Jeslyn Lerh; Editing by Chizu Nomiyama, Emelia Sithole-Matarise, Josie Kao, Leslie Adler and David Gregorio)
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Brent crude futures rose 1.8%, to settle at $76.69 a barrel, while U.S. West Texas Intermediate crude (WTI) ended $1.23 higher at $70.90.
Brent crude settled down 1.2%, to $74.99 while West Texas Intermediate U.S. crude futures fell 1%, to $69.26 a barrel.
Brent crude futures fell by 78 cents to settle at $75.91 a barrel. U.S. West Texas Intermediate crude futures slid by 94 cents, to end the session at $69.96 a barrel.
According to the International Energy Agency (IEA), Russia's total exports of oil and petroleum products in February 2023 fell to 7.5 million barrels per day (bpd), from an average amount of 7.7 million bpd in 2022 (7.5 million bpd in 2021).
Fuel demand in February hit its highest level in at least 24 years, data from the website of the Petroleum Planning and Analysis Cell (PPAC) showed this month.