Crude oil drops as China’s covid cases rise; set for weekly gains by

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By Peter Nurse – Oil prices fell Friday due to China’s Covid lockdowns. However the benchmarks were poised to gain weekly as strong U.S. trades point towards underlying demand.

Futures traded 1.5% lower at $87.78/barrel by 09:10 ET (13.10 GMT), while contract prices fell 1.2% to $93.88 

China reported 1,506 new COVID-19 infection cases on Oct. 27, according to the National Health Commission. This is an increase of 1,264 cases that were reported a day earlier.

This resulted in the Chinese authorities imposing fresh Covid lockdowns in a number of cities, maintaining the country’s Covid Zero policy which has contributed to the reduction of economic activity in the world’s largest importer of crude. 

Both benchmarks are set to see gains of more than 3% this Week. In October, they are also set for a positive month after a string of four monthly drops. 

Official data showing that U.S. crude oil exports rose to a record-breaking 5.1 million barrels per hour last week has helped the market. This shows resilience in global consumption despite rising inflation rates.

Additionally, Germany, the Eurozone’s dominant economy, posted a better-than-expected 0.3% gain in quarterly from the previous quarter. 

This followed the U.S. economy, the world’s largest, which rebounded from six months of contraction in the third quarter, as grew by 2.6% on a year-on-year basis. 

The Organization of the Petroleum Exporting Countries (OPEC) will update its long term oil demand forecasts in its 2022 World Oil Outlook Monday.

Stocksak reported that the group will likely continue to believe that world oil demand will rise for at least ten more years despite growing use of electric cars. He cited two OPEC sources.

On the supply side, a European ban on Russian crude imports is threatening to support prices. However, there are doubts about how effective Western plans for imposing a cap on Russian oil price rises.

“It will be difficult to get key buyers, China and India to follow the cap,” said analysts at ING, in a note. “And there is always a risk that Russia reduces supply as a result. Obviously, that would have the opposite effect of what the U.S. is trying to achieve.”

Corporate news Exxon Mobil (NYSE: ) About 15% ahead of consensus predictions, Chevron ‘s (NYSE:) $11.2 billion profit, the second highest in its history,  also .

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