Oil extended losses for a third session as investors weighed the prospect of further monetary tightening to combat rising US inflation and the potential for more virus lockdowns in China.
est Texas Intermediate futures fell nearly 2 percent to trade below $119 a barrel amid a broader market selloff. US inflation accelerated to a fresh 40-year high last month, raising the likelihood of more aggressive rate hikes by the Federal Reserve. China is beginning to rein in viruses as cases rise, just weeks after major easing in key cities like Shanghai.
Oil is still up nearly 60 percent this year as a rebound in economic demand coincided with a tightening market following Russia’s invasion of Ukraine. The war fueled inflation, driving up the cost of everything from food to fuel. US retail gasoline prices have repeatedly broken records, recently hitting $5 a gallon.
“Inflation is indeed starting to weigh on consumers around the world and concerns are now emerging about what will happen after the summer demand surge,” said Vandana Hari, founder of Vanda Insights in Singapore.
Goldman Sachs Group Inc. reiterated on Friday that energy prices need to keep rising for Americans to start cutting consumption. Consumer resilience is “still sufficient to absorb higher prices at the pump,” Damien Courvalin, a senior commodities strategist at the bank, told Bloomberg Television.
The US has repeatedly asked OPEC to pump in more crude to tame soaring gasoline prices and the hottest inflation in decades. President Joe Biden said Saturday he has not yet made a decision about visiting Saudi Arabia, but that if he does go, he would attend meetings that go beyond energy issues. A visit would reflect a shift in diplomatic priorities.
Beijing said a Covid-19 outbreak linked to a popular bar was more difficult to control than previous clusters over a weekend that saw mass testing and rising infections in both the city and Shanghai. Authorities also delayed the reopening of most schools in the capital, scheduled for Monday, while most districts in Shanghai suspended food service in restaurants.
https://www.independent.ie/business/world/oil-extends-losses-as-investors-weigh-us-inflation-and-china-demand-41746474.html Oil adds to losses as investors weigh US inflation and Chinese demand