Oil ends its worst week in almost 50 days, due to the difficulty of the Chinese economy

The oil prices headed to close lower this week after almost 50 days of increasesas China’s economic woes overshadow signs of tight supply.

The seven-week rise in prices, driven by the supply cuts by the Organization of the Petroleum Exporting Countries and allies (OPEC+)was the longest streak for both benchmarks this year.

And, in this context, this Friday, the Brent futures climbed about 18% and those of the West Texas Intermediate (WTI), more than 20% in the seven weeks ending August 11. Thus, the prices hit their highest levels in months.

However, this week, indices have fallen more than 3%. And this Friday the prices hardly change: crude oil Brent gives up 21 centsto $83.91 a barrel, while WTI fell 9 cents, to $80.3.

The Chinese problem affects oil

This happens in a context where Chinathe world’s largest oil importer, is seen as key to propping up the crude oil demand for the rest of the year, but the country’s post-pandemic recovery has been slow, undermined by tepid domestic consumption, faltering factory activity and a sluggish real estate sector, raising concerns that beijing will not reach its 5% annual growth target without major stimulus measures.

“He Petroleum sits…abandoned in the shipping lanes of financial news and even the continued withdrawal of inventories is not enough to allow continued sailing in positive waters,” said John Evans of oil broker PVM.

Data showed that the crude oil inventories in the United States they fell by almost 6 million barrels last week due to strong exports and refining run rates. The weekly supply of products, an indicator of demand, reached its highest level since December.

China it also undertook a rare destocking in July, the first time in 33 months that it resorted to storage.

Another factor that weighs on the prices is the concern that the US Federal Reserve has not finished raising interest rates to combat inflation. Rising borrowing costs may impede economic growth and, in turn, reduce global demand for oil.