Commodity Market: WTI Crude Oil falls over 1% after China doubles down on COVID-19 curbs

Futures on US West Texas Intermediate Crude Oil retreated more than 1% on Friday after China, a key crude oil importer, doubled down on COVID-19 curbs.

Yet, the futures were set to register a weekly advance due to supply concerns ahead of EU’s cut-off of Russian oil imports.

Yesterday a number of Chinese cities tightened curbs against COVID-19 outbreaks, with buildings sealed up and districts locked down, causing distress for millions of citizens.

Data by China’s National Health Commission showed the country had registered 1,506 new coronavirus infections on October 27th, compared to 1,264 new cases in the prior day.

According to the latest projection by the International Monetary Fund, China’s economic growth may decelerate to 3.2% in 2022, compared to a 4.3% growth expected in April.

“The oil market has benefited from a weaker dollar and hope for a strong Chinese economic rebound, but now the focus is shifting towards recession risks that are dragging down the crude demand outlook forecasts for the rest of the year,” Edward Moya, senior market analyst at OANDA, was quoted as saying by Reuters.

Still, the oil market “remains wary of the impending deadlines for European purchases of Russian crude before the sanctions kick in on 5 December,” ANZ Research analysts wrote in an investor note.

As of 8:11 GMT on Friday WTI Crude Oil Futures were losing 1.10% to trade at $88.10 per barrel. Earlier this week, the black liquid went up as high as $89.79 per barrel, which has been its strongest price level since October 11th ($90.15 per barrel).

WTI Crude Oil Futures for delivery in December were set to register a 3.49% gain for the week, following another 0.47% advance in the prior week.

At the same time, Brent Oil Futures were losing 1.20% on the day to trade at $93.90 per barrel. Earlier this week, Brent Oil went up as high as $95.30 per barrel, which has been its strongest price level since October 11th ($96.46 per barrel).

Brent Oil Futures for delivery in January were set to register a 0.79% gain for the week, following another 2.04% advance in the previous week.