Oil Prices Fall to $92, Traders Concerned About China

Oil Prices fell on Tuesday in international markets to $92 due to a new wave of Covid-19 infections in China, which has reignited concerns about demand in the world’s largest importer.

In the London market, the price of a barrel was $1.08 lower than yesterday’s closing, amounting to $92.06. Yesterday’s trading ended down $2.85. In the American market, a barrel was traded today at a price $1.13 lower, at $84.74. Yesterday, it closed trading down $3.09.

Traders were unsettled yesterday by the new wave of Covid-19 infections in China, which has dashed hopes that the world’s largest oil importer would soon lift all corona restrictions and pave the way for a recovery in energy demand.

The number of infection cases surged last weekend, and on Monday, Beijing and other major cities reported the highest number of new infections since the beginning of the pandemic.

– The rise in new coronavirus cases in Beijing and other cities served as a reminder that we should not expect a change in the trajectory of economic growth and oil demand in the world’s largest oil importer anytime soon, said Tamas Varga from PVM.

On Tuesday, the number of infected continued to rise, including in the capital Beijing, and separate data showed slower growth in Chinese industrial activity.

The Organization of the Petroleum Exporting Countries (OPEC) again lowered its estimate for global oil demand growth in 2022 on Monday, for the fifth time since April, highlighting Covid-19 in China, high inflation, and rising interest rates in major economies.

The International Energy Agency (IEA) raised its demand growth forecast for this year and reminded that on December 5, the EU’s embargo on Russian oil imports by ship will come into effect, meaning a replacement for about 1.1 million barrels of oil per day needs to be found, they emphasized. In 2023, unfavorable economic trends are expected to hinder demand growth, they added.

A significant drop in oil prices was halted today by estimates that U.S. crude oil inventories fell by about 300,000 barrels last week, according to a survey published on Monday by Reuters. The American Petroleum Institute (API) will release data during the day, and the government tomorrow.

OPEC separately announced today that the price of a barrel of its members’ oil basket fell by 39 cents on Monday, to $94.92.