Oil futures remained under pressure on Friday, trading at two-week lows as resurgent COVID-19 concerns clouded the picture for energy demand and broader markets turned their eyes to a hawkish Federal Reserve.
U.S. crude prices on Thursday hit their lowest level since late September as China’s zero-covid-19 policy reignited concerns that the world’s second-largest economy would buy less oil and natural gas. There was little new news Friday to change that outlook.
Natural gas futures joined the broader energy space in Friday’s retreat. Natural gas bucked the bearish trend for the sector on Thursday, finishing higher as US government data showed a weekly rise in domestic supplies that produced no surprises for the market.
West Texas Intermediate crude for December delivery CL.1,
It was down 71 cents, or 0.8%, at $80.93 a barrel in early trade. The contract fell 4.6 percent to $81.64 a barrel on the New York Mercantile Exchange on Thursday. Prices marked the lowest settlement for a first-month contract since Sept. 30, according to Dow Jones market data.
Brent Crude January 00 BRN,
lost nearly $1, or 1.1%, to $88.77 a barrel. The contract fell 3.3 percent to $89.78 a barrel on ICE Futures Europe Thursday, its lowest level since Oct. 3.
December gasoline RBZ22,
lost 0.2% to $2.4506 a gallon, while December heating oil HOZ22,
fell 0.4% to $3.5113 a gallon, down 0.4%.
December natural gas NGZ22,
fell 3.5% to $6.141 per million British thermal units, after two days of strong gains.
Crude oil prices came under pressure this week as demand concerns offset signs of tight supplies.
China’s State Council has warned cities to avoid an “irresponsible relaxation” of COVID-19 measures, according to the South China Morning Post. The Wall Street Journal reported a sevenfold increase in COVID infections over the past two weeks in China, even as the country’s new policy of easing measures was intended to lessen the impact of zero COVID restrictions.
On the supply side, traders are pondering how much crude oil will come off the market once the maritime embargo on Russian oil begins on Dec. 5, and whether there will be an effective price ceiling that will allow Russian oil to come on the market, but at a lower price. price.
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“The market will no doubt focus on OPEC+ supply in the coming weeks, as it remains to be seen how much daily production will actually fall after the official announcement of a 2 million barrel cut,” said Barbara Lambrecht, writing for the research Commerzbank’s commodity group, in a daily note.
“It is not yet clear what impact the upcoming European Union embargo and price cap to be set in the coming days will have on Russian supply,” the analysts continued in their note. “So far, Russia still seems to be finding sufficient buyers and is even ramping up its oil production. That said, we are confident that these two factors will reduce supply, which will support prices in the coming weeks.”
The movement of the US dollar was also in focus and could continue to affect the trading of commodities denominated in the US unit.
The green coin DXY,
was little changed on Friday after a sharp drop to three-month lows this week, but hawkish bombardment by Federal Reserve officials continued to set the tone for the broader SPX financial markets.
“Whenever good news on the inflation front leads to some easing of economic conditions, the Fed sees no choice but to rein in optimism…” said Raffi Boyadjian, chief investment analyst at XM.
But the most dramatic intervention came on Thursday, when the president of the St. high inflation,” he added.
U.S. natural gas supplies rose by 64 billion cubic feet for the week ended Nov. 11 to about 3.6 trillion cubic feet, according to data from the Energy Information Administration on Thursday.
That metric compared with an average analyst forecast for an increase of 62 billion cubic feet, according to a survey by S&P Global Commodity Insights.