Oil eases as investors watch US oil release, demand concerns in China, Auto News, ET Auto - Market News
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Oil eases as investors watch US oil release, demand concerns in China, Auto News, ET Auto

Oil eases as investors watch US oil release, demand concerns in China, Auto News, ET Auto

Brent oil futures fell 30 cents, or 0.4%, to $84.17 a barrel at 0150 GMT. US West Texas Intermediate crude fell 45 cents, or 0.6%, to $81.67 a barrel.

SINGAPORE: Oil prices eased for a second session on Friday over growing concerns that Washington could soon act to lower prices, while move controls in China to contain a COVID-19 outbreak weighed on fuel demand.

raw Brent futures were down 30 cents, or 0.4%, to $84.17 a barrel at 0150 GMT. US West Texas Intermediate crude fell 45 cents, or 0.6%, to $81.67 a barrel.

China, the world’s number 2 oil consumer, has some International flights and stepped up efforts to contain a virus outbreak in Tianjin, as the highly transmissible Omicron variant has spread to the northeastern city of Dalian.

Many cities, including Beijing, have also urged people to stay during the Lunar New Year holiday, which could reduce transportation fuel demand during a peak travel season.

“The market is a bit off-putting,” said Avtar Sandu, a commodities manager at Phillip Futures in Singapore, adding that reports on the COVID-19 situation in China and the sale of strategic petroleum reserves (SPR) in the United States were a concern.

The U.S. Department of Energy said Thursday it had sold 18 million barrels of strategic crude oil reserves to six companies, including Exxon Mobil and a unit of refinery Valero Energy Corp.

Nevertheless, Brent and WTI prices are set to rise for the fourth straight week, supported by supply concerns in Libya and Kazakhstan and a drop in US crude inventories to the lows of 2018. Some investors are also optimistic about the impact. from Omicron on the global economy and demand for oil will be short-lived.

Several banks have forecast the oil price to reach $100 a barrel later this year as demand is expected to outpace supply.

“The near-term outlook still carries a lot of risk, but the optimism is high that it will be short-lived,” OANDA analyst Edward Moya said in a note.

However, with oil prices above $80 a barrel, there is increasing political pressure on the White House to lobby OPEC+ to meet their production quotas, he said.

“Biden may resort to another SPR release and while that won’t solve any problems, it could send WTI crude to the $80 level,” Moya said.

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Brent oil futures were up 15 cents, or 0.2%, to $84.82 a barrel, at 1024 GMT.

Brent crude fell 24 cents, or 0.3%, to $81.75 a barrel, while US West Texas Intermediate (WTI) crude fell 56 cents, or 0.7%, to $78.90 a barrel.