World News
More China Covid Cases Causes More Losses For Oil
Continued concern that China will extend its lockdowns due to rising Covid cases combined with an increase in U.S. crude stockpiles caused another decline in oil prices on Wednesday, this time by over $3 per barrel for a key American benchmark.
WTI fell $3.08 to $85.83 per barrel and Brent dipped $2.71 to settle at $92.65 per barrel after it was learned that Covid cases in Beijing hit their highest in over five months; meanwhile, Washington disclosed that U.S. crude stockpiles rose 3.93 million barrels, climbing to the highest level since July 2021.
In another bearish sign, American Petroleum Institute data showed that U.S. gasoline inventories rose by about 2.6 million barrels, compared to forecasts for a drawdown of 1.1 million barrels.
Rebecca Babin, a senior energy trader at CIBC Private Wealth Management, pointed out that "The macro data from China is much more negative" than the crude inventories report and is "the real driver of trading direction."
Compounding the China worries were health officials stating they would stick to their "dynamic clearing" approach to new infections – which effectively quashed hopes of last week that the country's zero-tolerance policy towards the virus would be relaxed.
Yet more pressure on oil was created by Salim Al-Aufis, minister of energy for Oman: he stated that current prices are not sustainable with his belief that prices will retreat to the $70-$80 per barrel range after the winter season.
He also mused that if recession issues and higher interest rates remain the same in Europe, the Organization of the Petroleum Exporting Countries (OPEC) may decide during their December meetings on further production cuts.
In the previous session, Helge Andre Martinsen, senior analyst at DNB Bank, said, "I think OPEC+ is super-happy with stabilizing Brent in the US$90s," but "there is a real risk of over-tightening in the next three-to-five months."
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 571.00 | 1.50 | 685.50 | 5.50 |
| Rotterdam | 516.50 | 1.50 | 677.50 | 3.50 |
| Houston | 556.00 | 6.00 | 679.00 | 1.00 |
| Fujairah | 565.00 | 4.50 | 755.00 | 1.50 |
| Global 20 Ports Average | 589.00 | 3.00 | 764.50 | 3.50 |
| Global 4 Ports Average | 552.00 | 3.00 | 699.00 | 2.50 |
| Global Average Bunker Price | 635.50 | 1.00 | 811.50 | 11.00 |
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