Oil Prices Fall as China Widens COVID-19 Curbs

By Adedapo Adesanya

Oil prices eased more than 1 per cent on Friday after top crude importer China widened its COVID-19 curbs.

Brent futures fell $1.19 or 1.2 per cent to settle at $95.77 a barrel, while the US West Texas Intermediate (WTI) crude fell $1.18 or 1.3 per cent to $87.90 per barrel.

Chinese cities ramped up COVID-19 curbs on Thursday, sealing up buildings and locking down districts after China registered 1,506 new COVID infections on October 27, the National Health Commission said, up from 1,264 new cases a day earlier.

Chinese cities from Wuhan in central China to Xining in the northwest are doubling down on COVID-19 curbs, sealing up buildings, locking down districts and throwing millions into distress in a scramble to halt widening outbreaks.

China reported a third straight day of more than 1,000 new COVID cases nationwide, a modest tally compared with the tens of thousands per day that sent Shanghai into a full-blown lockdown earlier this year but enough to trigger more restrictions across the country.

The country’s coronavirus caseload has remained small by global standards, but its tough measures this year against the highly transmissible Omicron variant have weighed heavily on the world’s second-largest oil consumer.

Amid this, the International Monetary Fund expects China’s growth to slow to 3.2 per cent this year, a downgrade of 1.2 points from its April projection, after an 8.1 per cent rise in 2021.

Meanwhile, economic strength in two major economies, the US and Germany, limited oil losses.

Data on Thursday showed a strong rebound in US gross domestic product (GDP) in the third quarter, demonstrating resilience in the world’s largest economy and oil consumer.

The German economy also grew unexpectedly in the third quarter, data showed on Friday, as Europe’s largest economy kept recession at bay despite high inflation and energy supply worries ahead of a looming European ban on Russian crude imports set to kick off in December.

Despite the downturn at the final session, for the week, Brent rose about 2 per cent, and WTI was up about 3 per cent.

Also, US oil and natural gas rigs fell this week, but in October noted their first monthly increase since July, according to energy service firm Baker Hughes Co.