Both benchmarks closed Friday at their lowest level since September 27, extending their losses for a second week, with Brent down 9% and WTI down 10%.
“Apart from the weakening demand outlook due to COVID restrictions in China, the rally in the US dollar today is also a bearish factor for oil prices,” said CMC Markets analyst Tina Teng.
The number of new COVID cases in China remained near April highs as the country battles outbreaks in its major cities. The immediate month Brent crude futures spread narrowed sharply last week, while WTI entered into contango, reflecting concerns about declining supplies.
Meanwhile, expectations of further interest rate hikes elsewhere have boosted the dollar, making dollar-denominated commodities more expensive for investors.
The release of more oil against a backdrop of weak Chinese fuel demand, coupled with a stronger US dollar, would have sent the market into deeper contango., encouraging more oil to be stored and pushing prices further lower, said Bob Yawger, head of energy futures at Mizuho. “That’s playing with fire”
The number of new COVID cases in China remained near April highs as the country battles outbreaks in its major cities..
“Apart from the weakening demand outlook due to China’s COVID cuts, the rally in the US dollar today is also a bearish factor for oil prices,” said CMC Markets analyst Tina Teng.
Source: Ambito
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