Crude eases on demand jitters as China tightens Covid curbs
The front-month ICE Brent October futures contract expired yesterday and was replaced by the November contract, which has dropped $2.15/bbl on the day to 09.00 GMT today, when it traded at $93.63/bbl.
PHOTO: Renewed lockdown and restrictions as Covid cases rise in China raise demand concerns. Getty Images
Upward pressure:
The US Energy Information Administration (EIA) reported a crude oil inventory decline of 3.3 million bbls in the week to 26 August, much bigger than the draw of 1.5 million bbls expected by analysts polled by Reuters.
Some market participants think OPEC+ could announce production cuts at its upcoming meeting on 5 September. Saudi officials have argued that the Brent futures price is not aligned with market fundamentals.
Downward pressure:
Renewed Covid-19 outbreaks in China and fresh lockdowns have threatened the country's demand recovery. Several cities in China, including Shenzhen, Chengdu and Dalian are tightening restrictions to curb rising Covid-19 cases.
China’s Caixin manufacturing purchasing managers' index (PMI) has contracted for the first time in three months to 49.5 in August, as heatwaves, power shortages and new Covid-19 outbreaks are disrupting operations.
Group of Seven (G7) finance ministers are gathering today to discuss imposition of a price cap on Russian oil sold in international market. White House Press Secretary Karine Jean-Pierre has called the measure the “most effective way” to ease global energy prices.
By Konica Bhatt
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