Oil steadies on US inflation data, but set for weekly fall due to China COVID fears
By Trend
Oil prices picked up on Friday after a milder than expected U.S. inflation data reinforced hopes that the Federal Reserve will slow down rate hikes, boosting chances of a soft landing for the world's biggest economy, Trend reports with reference to Reuters.
Prices were still set to show a decline for the week after COVID-19 cases in top oil importer China jumped, raising fears of weaker fuel demand.
Brent crude futures rose 21 cents, or 0.2%, to $93.88 a barrel at 0500 GMT, extending a 1.1% rise in the previous session.
U.S. West Texas Intermediate (WTI) crude futures gained 22 cents, or 0.3%, to $86.69 a barrel, after climbing 0.8% in the previous session.
Still, prices were headed for weekly declines of over 4% due to rising U.S. oil inventories and fears of weakening demand in China, due to Beijing sticking to its zero-COVID strategy, both of which CMC Markets analyst Tina Teng described as "major bearish factors."
Chinese authorities stepped up lockdowns and other curbs to prevent the virus spreading as China's case load soared to its highest since the lockdown in Shanghai lockdown earlier this year. Both Beijing and Zhengzhou reported record daily cases.
"Since traders are hyper-sensitive to lockdowns in the world's largest oil importer, this could temporarily hold the oil market's top-side ambition in check," said Stephen Innes, managing partner at SPI Asset Management. "But unquestionably, we are in a much better place than yesterday."
Besides work-from-home orders reducing mobility and fuel demand, travel across China remained subdued as people wanted to avoid the risk of being caught up in quarantine, ANZ Research analysts said in a note.
Hopes that China was going to ease its zero COVID policy pumped up the oil market last week, but comments from health officials this week made it clear they would continue to strictly curb any outbreaks.
"With fresh lockdowns and restrictions still being implemented and the policy receiving support from President Xi Jinping at the Party Congress in late October, it's hard to see authorities deviating from the policy in the short term," Commonwealth Bank commodities analyst Vivek Dhar said in a note.
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