By Adedapo Adesanya
The prices of the crude oil grades were marginally down on Thursday, as worries about inflation dampening oil demand contended while China is considering easing COVID-19 quarantine measures for visitors.
While the Brent crude futures fell by 3 cents to settle at $92.38 a barrel, the United States West Texas Intermediate (WTI) crude futures dropped 1 cent to trade at $84.51 per barrel.
To fight inflation, the US Federal Reserve is trying to slow the economy and will keep raising its short-term rate target, said Federal Reserve Bank of Philadelphia President Patrick Harker on Thursday.
He said the central bank is not done with raising its short-term rate target amid very high levels of inflation while adding it was likely the bank would find space next year to pause the tightening process and take stock of how its rate increases are impacting the economy.
Given the current inflation situation, “the Fed is actively trying to slow the economy,” and “we are going to keep raising rates for a while,” Mr Harker said.
The US Dollar index pared losses after the comments, weighing on oil prices. A stronger dollar reduces demand for oil by making the fuel more expensive for buyers using other currencies.
Supporting prices, however, China is considering cutting the quarantine period for visitors to seven days from 10 days.
China, the world’s largest crude importer, has stuck to strict COVID curbs this year, which weighed heavily on business and economic activity, lowering demand for fuel.
According to reports, the country now requires travellers to isolate for 10 days on entry into the country, with seven days in a hotel room, followed by three days of home monitoring.
Officials are targeting a cut in the quarantine period to two days in a hotel and then five days at home.
The reported cut in quarantine comes as Beijing boosts measures to stop COVID, strengthening public checks and locking down some residential compounds after a quadrupling of its caseload in recent weeks.
Investors will look forward to the European Union’s ban on Russian crude and oil products, as well as the output cut from the Organisation of the Petroleum Exporting Countries and allies, including Russia, known as OPEC+, which has supported prices.
OPEC+ agreed on a production cut of 2 million barrels per day in early October.
In response, US President Joe Biden announced a plan on Wednesday to sell off the rest of his release from the nation’s Strategic Petroleum Reserve (SPR) by year’s end, or 15 million barrels of oil, and begin refilling the stockpile as he tries to dampen high gasoline prices ahead of midterm elections on November 8.
