Oil prices rose early Friday but lost for the third week in a row amid growing fears of a slowdown in demand in China, where Covid restrictions are returning amid a spike in infections.
As of 10:00 AM ET Friday, US benchmark WTI oil rose 0.62% to $78.42, and the international benchmark, Brent Oiltraded up 0.30% to $85.60.
Oil prices fell earlier this week to their lowest level since January after reports, later debunked, that OPEC+ might consider boosting output.
Concerns about weak demand in China, the world’s largest importer of crude oil, took over the market on Tuesday and continue to weigh on sentiment.
China registers near-record numbers of new Covid infections daily – close to peaking in April 2022 when Shanghai’s financial center was locked down for several weeks. Rising Covid cases in China and the return of restrictions have weighed on oil prices as the market fears another slowdown in China’s economic growth and fuel demand, on top of fears of a global recession.
Oil fell further this week on reports that the European Union is in talks to cap the price of Russian oil somewhere between 65 and 70 dollars per barrel— a cap that, if approved, would not effectively lower the price of Russia’s flagship oil currently traded on the market.
There is differences between Member States at the price cap level. One group of EU countries, including Russia’s neighbors Poland, Lithuania and Estonia, believe that the proposed price ceiling is too high and would still bring Russia a solid oil income. Another group, made up mostly of southern EU members with large shipping businesses – Greece, Malta and Cyprus – said the $65-70 cap was too low, demanding compensation for the potential loss of Russian oil trade to shipping. to Reuters.
“Crude oil trades are down for the third week in a row as concerns about demand, especially from an increasingly lockdown China, weigh on sentiment,” Saxo Bank strategists. said on Friday.
“The 12-month WTI and Brent futures spread has eased to its lowest backwardation level since December last year, reflecting market concerns about a recession and a seasonal slowdown in demand hurting contracts for the coming month,” Saxo Bank added.
Tsvetana Paraskova for Oilprice.com
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