New York [US], April 23 (ANI/Sputnik): Oil prices settled down on Friday, falling 5% over the week, as potentially lower Chinese energy consumption from the lockdown of its Shanghai financial hub overshadowed supply tightness from Russian sanctions that kept the market up for weeks.
London-traded global crude benchmark Brent settled Friday’s trade down $1.68, or 1.6%, at $106.65 per barrel. For the week, Brent showed a 4.5% loss that came after a near 9% gain last week and the 13% drop in two prior weeks. If the declines keep up, April will be this year’s first month in the negative for Brent.
New York-traded US crude benchmark West Texas Intermediate, or WTI, settled Friday’s trade down $1.72, or 1.7%, at $102.07 a barrel. Like Brent, WTI showed a drop of 4.5% for the week, and similar volatility to the global benchmark in three previous weeks.
Crude prices fell as concerns about the multi-week lockdown of Shanghai over a new COVID-19 cases and deaths weighed on the sentiment in oil, even as the Europe-Russia face-off over Ukraine suggested that the market had no little option but to go higher.
“The risks are certainly more tilted to the upside, given the war in Ukraine and a potential embargo on Russian exports, but lockdowns in China and the risk of a Fed-driven economic slowdown are also significant,” Craig Erlam, head of research for Europe at online trading platform OANDA, said.
China’s demand for gasoline, diesel and aviation fuel in April is expected to slide 20% from a year earlier, media reports said.
That would be equivalent to an estimated drop of 1.2 million barrels a day in crude oil consumption and would be the largest hit to demand since the lockdown more than two years ago in Wuhan, the central Chinese city where the novel coronavirus was first identified.
Federal Reserve Chairman Jerome Powell also unrattled markets this week with hawkish talk at the IMF-World Bank Spring meetings. Powell said it would be “appropriate” for the central bank to move faster and heavier on interest rates – a sign that the Fed’s rate decision committee would approve a half point rise at its upcoming May 4-5 meeting after a previous hike of just a quarter point in March.
“Some fear that a 50 basis point rate increase will be the first of many and could slow down the economy and the demand for oil,” Phil Flynn, energy analyst at Price Futures Group in Chicago, wrote in a commentary.
“It is not just a tightening cycle upsetting traders overnight but also the pricing in of a 50-basis point interest rate increase by September by the European Central Bank. The Bank of Japan on the other hand wants to remain dovish but worries that the course of the US and Europe could force them to change course,” he said.
Germany – Europe’s the largest economy – is expected to cut its growth forecast for 2022 to 2.2% from 3.6%, according to media reports. (ANI/Sputnik)