Adedapo Adesanya
By Adedapo Adesanya
Brent slumped below $90 per barrel, a level last seen prior to Russia’s invasion of Ukraine as downbeat Chinese trade data fed investors to worry about recession risks.
China’s weak economic data and stringent zero-COVID policy continued to add to demand concerns, leaving the price of the international benchmark crude futures down by $4.83 to $88 a barrel, with the United States West Texas Intermediate (WTI) crude down by $4.94 or 5.7 per cent to $81.94 per barrel, its lowest since January.
Demand outlook remains a bearish weight on oil prices with the largest crude importer in the world, maintaining its zero-COVID lockdown policy that now has some 65 million people under a restricted movement regime.
More lockdown orders were handed down in Guiyang, and a lockdown in the tech hub of Chengdu was extended.
Its crude oil imports in August fell 9.4 per cent from a year earlier as August numbers showed that China imported 9.35 million barrels per day of oil last month. That is half a million barrels per day higher than imports in July but 1.1 million lower than imports in August 2021.
The American Petroleum Institute (API) reported a build this week for crude oil of 3.645 million barrels, while analysts predicted a draw of 733,000 barrels.
The build comes as the Department of Energy released 7.5 million barrels from the Strategic Petroleum Reserves in the week ending September 2, leaving the SPR with just 442.5 million barrels.
In the prior week, the API reported a build in crude oil inventories of 593,000 barrels after analysts had predicted a draw of 633,000 barrels.
The American Petroleum Institute (API) released its report on Wednesday, a day later than usual because of a public holiday on Monday while the official government data from the Energy Information Administration (EIA) will be published on Thursday.
Prices drew some support from plans by Russian President Vladimir Putin to halt the country’s oil and gas exports if price caps are imposed.
The European Union (EU) proposed to cap Russian gas and signalled that it was moving to do so, raising the risk of rationing in some of the world’s richest countries this winter. Russia’s Gazprom has halted flows from the Nord Stream 1 pipeline, cutting off a substantial percentage of supply to Europe.
The halting could create a recession in Europe, which has a high dependency on Russian energy.
