This post was originally published on this site
Oil futures fell Thursday as expectations China’s loosening of COVID curbs would spark a rebound in demand gave way to worries that a surge in infections could weigh on the economy.
Investors were also awaiting official data on U.S. oil, oil-product and natural-gas inventories.
Price action
-
West Texas Intermediate crude for February delivery
CL.1,
-0.92%
CL00,
-0.92%
CLG23,
-0.92%
fell $1.12, or 1.4%, to $77.84 a barrel on the New York Mercantile Exchange. -
February Brent crude
BRNG23,
-0.88% ,
the global benchmark, was down 96 cents, or 1.2%, at $82.30 a barrel on ICE Futures Europe. March Brent
BRN00,
-0.82%
BRNH23,
-0.82% ,
the most actively traded contract, declined $1.04, or 1.2%, to $82.95 a barrel. -
Back on Nymex, January gasoline
RBF23,
-0.97%
fell 1.4% to $2.339 a gallon, while January heating oil
HOF23,
-2.53%
dropped 2.2% to $3.304 a gallon. -
February natural-gas futures
NGG23,
-0.43%
rose 1.9% to $4.774 per million British thermal units.
Market drivers
Oil-market bulls initially cheered China’s relaxation of COVID-19 curbs. The country’s zero-COVID policy, which resulted in large-scale shutdowns in an attempt to hold off the virus, was seen significantly holding back demand for crude by one of the world’s largest energy consumers in 2022.
But a surge in infections in China following the lifting of restrictions, and concerns about travelers spreading cases outside the country, have stoked another round of near-term demand concerns, analysts said.
“It’s been quite the shift from fighting every case to living with the virus and that creates enormous uncertainty for the start of the year as case numbers surge and the health system is overwhelmed,” said Craig Erlam, senior market analyst at Oanda, in a note. “How the leadership will respond is about as clear as the data itself so for investors it will be a case of learning as we go using what little data and anecdotal evidence we have.”
The American Petroleum Institute late Wednesday reported a 1.3 million barrel drop in U.S. crude inventories last week, according to a source citing the data. The industry trade group saw a 510,000 barrel rise in gasoline stocks, while distillates saw a rise of 388,000 barrels. Official data from the Energy Information Administration is due Thursday morning, a day later than usual due to Christmas holiday on Monday.
Analysts surveyed by S&P Global Commodity Insights, on average, expect crude inventories to show a 3 million barrel decline, while gasoline stocks were expected to show a fall of 2.2 million barrels and distillates were seen down 800,000 barrels.
EIA will also report weekly natural-gas storage figures Thursday. Analysts surveyed by S&P Global Commodity Insights expect the data to show a net withdrawal of 196 billion cubic feet from storage last week.
