Oil falls despite OPEC cut
2022.11.16 23:02
Oil falls despite OPEC cut
Budrigannews.com – Oil prices fell further on Thursday, despite data showing U.S. inventories fell much more than expected and supply appeared to be shrinking as a surge in COVID-19 cases in China raised doubts about a slowdown in crude demand.
China reported more than 20,000 new daily cases this week, the biggest increase in about seven months. While that number is part of the country’s population, it was large enough to foment concern about the new restrictions under the country’s strict zero COVID policy.
And data released this week showed that the country’s economy is again under pressure from the pandemic, which heralds further weakness in appetite for goods.
The updated COVID restrictions also appeared to have caused civil unrest in some parts of the country, even as China halted mass testing in some regions.
It fell 1.1 percent to 91.82 barrels in early Asian trade and sank 1.3 percent to 84.44 barrels. Both contracts extended losses into the second session after going lower on Wednesday in a volatile session.
Oil prices marked a weak start to the week after the Organization of the Petroleum Exporting Countries (OPEC) adjusted demand forecasts for 2022 and 2023, citing growing headwinds from high inflation and rising interest rates.
Waning concerns about the escalating conflict between Russia and Ukraine have dampened appetite for crude oil after NATO members said there was a Russian-made missile that killed two people in Poland.
The news undermines some bets that the escalation of the conflict will again disrupt global oil supplies, as it was at the beginning of the year.
Traders mostly saw historical data showing a larger-than-expected draw last week, even as the government released about 4.1 million barrels of its strategic oil reserves.
However, a larger-than-expected drop and inventories of petroleum products raised concerns about consumer appetite for oil, the main driver of demand.
Still, crude oil supplies now appear to be dwindling. OPEC crude exports fell sharply this month, indicating that cartel members are likely to have implemented their part of the 2 million barrels per day supply cut announced in January.
The cartel also recently assured investors that it was ready to compensate for the weakness in prices. So far, 190 Brent seems to be the OPEC threshold for oil prices.
