Brent Slides Below $90 on Mounting COVID-19 Cases, Rate Hike Fears

November 18, 2022
brent crude oil

By Adedapo Adesanya

Brent crude fell by 3.3 per cent or $3.08 on Thursday to settle at $89.78 per barrel on mounting COVID-19 cases in China and fears of more aggressive hikes in interest rates.

also, the price of the US West Texas Intermediate (WTI) crude slid by 4.6 per cent or $3.95 to settle at $81.64 per barrel as China, the world’s largest oil importer, reported rising daily COVID-19 infections.

It reported 23,276 new COVID-19 infections on November 16, of which 2,388 were symptomatic and 20,888 were asymptomatic, the National Health Commission said on Thursday.

That compared with 20,199 new cases a day earlier – 1,623 symptomatic and 18,576 asymptomatic infections, which China counts separately.

Excluding imported infections, China reported 23,132 new local cases, of which 2,328 were symptomatic, and 20,804 were asymptomatic, up from 20,059 a day earlier.

Looking at the reality on the ground, Chinese refiners have asked to reduce Saudi crude volume in December.

Following its rigid COVID curbs, average refining rates at state-owned refineries fell to around 70% between May and August.

The market was impacted by indications that interest rates will continue to rise here in the US.

Fresh comments from St Louis Federal Reserve President, Mr James Bullard, said a basic monetary policy rule would require interest rates to rise to at least around 5 per cent, while stricter assumptions would recommend rates above 7 per cent.

The Dollar also rose as investors digested US economic data. A stronger Dollar makes dollar-denominated oil more expensive for holders of other currencies.

Geopolitical tensions eased as Poland, and the North Atlantic Treaty Organisation (NATO) said a missile that crashed inside the country was probably a stray fired by Ukraine’s air defences and not a Russian strike.

Oil gained support from official figures showing US crude stocks fell by a bigger-than-expected 5 million barrels in the latest week.

Supply is also tightening in November as the Organisation of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, implement their latest output controls to support the market.

The International Energy Agency (IEA), this week, projected demand growth to slow to 1.6 million barrels per day in 2023 from 2.1 million barrels per day this year.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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