Oil edged lower as renewed lockdowns in parts of Shanghai may dampen global fuel demand and ease pressure on tight markets.
est Texas Intermediate futures fell 0.5 percent on Thursday after spending the session near a three-month high as low fuel inventories underscore tight supply balances. Shanghai re-imposes major movement restrictions to curb the spread of Covid and questions recovery in demand in one of the world’s largest oil-consuming countries. The financial hub lifted a two-month shutdown in early June.
“Crude oil futures are also in an overbought state and a correction is definitely due,” said Dennis Kissler, senior vice president of trading at BOK Financial. “Prices will need to take a breather at some point and the new possible COVID issues in China are helping to do that this morning.”
Crude oil has maintained its upward momentum this year as economies recover from the pandemic, while Russia’s war in Ukraine has upended trade flows, prompting further tightening. Prices are still “nowhere near” their peak, according to key OPEC member, the United Arab Emirates, which said on Wednesday that China’s imminent recovery could weigh further on the market.
The renewed restrictions are keeping prices in check after Crude Oil hit a three-month high this week amid strong product markets. US gasoline inventories are at their lowest seasonal level in eight years as consumption rises, even as retail motor fuel prices are already at record levels.
Overall, though Shanghai will lock down a district for mass testing on Saturday, China is cautiously coming off tough virus restrictions. China National Petroleum Corp., the country’s biggest oil and gas producer, has forecast oil demand to rise in the next quarter but warned of more disruption this year due to more Covid-19 outbreaks.
Goldman Sachs Group Inc. said this week that prices would need to keep climbing to achieve the demand destruction needed for the market to rebalance. The bank raised its quarterly forecasts for this year and through 2023, raising its WTI estimate for the next quarter to $137 a barrel.
https://www.independent.ie/business/world/oil-slips-as-shanghai-lockdowns-potentially-curb-demand-41739352.html Oil slips as Shanghai lockdowns potentially dampen demand