Oil Flat As China Rumours Spread And Biden Turns Up The Hyperbole

Meanwhile, a trend to global economic activity remains unclear: File Image/Pixabay

Oil on Thursday lived up to its most recent status of being range bound as traders seemed torn between responding to reports that China may ease its Covid quarantine restrictions on one hand and a drop in the broader equity markets on the other.

In the end, West Texas Intermediate for December delivery fell 1 cent to settle at $84.51 (the November contract, which expired on Thursday, rose 43 cents to settle at $85.98), while Brent dropped 3 cents to $92.38.

While it was said that Covid infections have swelled in Beijing to the highest in four months, thus stoking fears of yet more lockdowns from a government that is doggedly pursuing a zero Covid policy, the severity of the virus has radically diminished; rumour is spreading that China may be open to relaxing some standards – although a policy shift would need to be approved by senior leaders.

Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, said of Thursday's trading that the market is "still searching for a direction…the market may be reaching a point where it's finding a bit more of a range until we really understand that there's a trend to global economic activity."

Phil Flynn, senior market analyst at Price Futures Group Inc., remarked, "Harker is saying that the war on inflation has just begun, so it seems like the market is getting nervous" – a reference to Patrick Harker, president of the Federal Reserve Bank of Philadelphia who said that to fight inflation the Federal Reserve is trying to slow the economy and will keep raising its short-term rate target.

In other oil related news on Thursday, U.S. president Joe Biden continued to express his disdain for the oil sector by stating, "My message to the American energy companies is this: You should not be using your profits to buy back stock or for dividends, not now, not while a war is raging.

"You should be using these record-breaking profits to increase production and refining."

He added that in the first half of the year, those companies spent $20 billion on buybacks, "the most significant buyback in almost a decade…..so far American companies are using that windfall of profits to buy back their own stock, passing that money on to their shareholders, not to consumers."

Separately, Biden announced a plan to sell off the rest of his release from the nation's Strategic Petroleum Reserve  by year's end, or 15 million barrels of oil.