By Adedapo Adesanya
Oil prices slid about 2 per cent on Thursday as China stood by its zero-COVID policy, while an increase in interest rate in the United States pushed up the Dollar.
Brent futures were down $1.49 or 1.5 per cent to settle at $94.67 a barrel, while the US West Texas Intermediate (WTI) crude fell by $1.83 or 2.0 per cent to settle at $88.17 per barrel.
In China, COVID-19 cases hit their highest level in two and a half months. The world’s largest oil importer stuck by its strict containment policy, dampening investor hopes for an easing of curbs.
The country reported 3,200 daily local COVID-19 cases on Thursday, the first tally above 3,000 since August 17.
The impact of the curbs continued to affect the Chinese economy, as a survey showed services activity contracting further in October on the impact of COVID curbs on businesses and consumption.
The Caixin services purchasing managers’ index fell to 48.4, the lowest since May, from 49.3 in September.
Hopes that last month’s twice-a-decade congress of the ruling Communist Party would mark a milestone after which China could lay the groundwork to begin dialling back from zero-COVID were disappointed when Xi Jinping, who secured a third leadership term, reiterated the validity of the approach.
Prices were also pressured as the Federal Reserve boosted interest rates by 75 basis points, and the central bank chief Jerome Powell said it was premature to consider pausing rate increases.
That sent the US Dollar higher on Thursday, with Powell indicating that U.S. rates are likely to peak above current investor expectations.
A strong Dollar reduces demand for oil by making it more expensive for buyers using other currencies.
The Bank of England also raised interest rates by the most since 1989 and warned that Britain could face a long recession.
However, losses were limited by expectations the market is set to tighten in the coming months.
The European Union’s (EU) embargo on Russian oil over its invasion of Ukraine is set to start on December 5 and will be followed by a halt on oil product imports in February.
Also, expected lower output from the Organization of the Petroleum Exporting Countries (OPEC) also lent price support.
Modupe Gbadeyanka