Oil prices slip as China COVID worries, firmer dollar outweighs supply concerns
Brent Crude Oil- Oil prices slid on Wednesday as COVID-19 cases in China continued to climb, sparking worries of lower fuel demand in the world’s top crude importer that outweighed concerns about an escalation of geopolitical tensions and tighter oil supply.
Brent crude futures dropped by 60 cents, or 0.6%, to $93.26 a barrel by 0501 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 69 cents, or 0.8%, to $86.23 a barrel.
Oil prices settled higher on Tuesday after oil supply to parts of Eastern and Central Europe via a section of the Druzhba pipeline was suspended, according to oil pipeline operators in Hungary and Slovakia.
The disruption came concurrent with an explosion in a village in eastern Poland near the Ukraine border that killed two people and raised the possibility that the Russian-Ukraine conflict could spill over.
But after the initial “knee-jerk rally in oil prices, the tepid market follow-through reflects the significant prudence that will be taken to avoid an escalation,” said Stephen Innes, managing partner at SPI Asset Management.
U.S. President Joe Biden’s comments that the missile was probably not fired from Russia also helped to ease immediate escalation worries, Innes said.
In China, rising COVID-19 cases are weighing on sentiment despite the hopes raised by easing virus restrictions this week.
That has dampened the oil demand growth outlook, with the International Energy Agency (IEA) forecasting demand growth to slow to 1.6 million BPD in 2023 from 2.1 million BPD this year.
