New York — Oil prices edged lower on Tuesday as rising COVID-19 cases in China heightened fears of lower fuel consumption from the world’s top crude importer.
Brent crude futures were down 13 cents to $93.01 a barrel at 11:26 a.m. EST, while U.S. West Texas Intermediate crude fell 1 cent to $85.86.
Investors cheered China’s announcements last week that it would reduce the impact of a strict zero-COVID policy to spur economic activity and energy demand, but analysts said lockdowns and surging case numbers remained a downside risk.
“Rising COVID cases in Beijing and in other cities served us with a reminder that a change in the trajectory of economic and oil demand growth in the world’s biggest oil importer is anything but imminent,” said Tamas Varga of oil broker PVM.
Investment bank JPMorgan cut its quarterly and full-year forecasts for economic growth in China. The Organization of the Petroleum Exporting Countries (OPEC) cut its 2022 global oil demand growth forecast for a fifth time since April, citing mounting economic challenges including high inflation and rising interest rates.
Supply concerns limited declines for oil prices.
A European Union ban on seaborne Russian crude, set to start on Dec. 5, means that 1.1 million barrels per day (bpd) must be replaced, the International Energy Agency said on Tuesday.
“When you look at what we saw from the IEA about global oil inventories, that should be very bullish,” said Phil Flynn, an analyst at Price Futures Group.
Offering some support to prices, U.S. stock index futures strengthened in the wake of cooler than expected inflation data released on Tuesday.
In U.S. supply, crude oil stocks are expected to have dropped by about 300,000 barrels in the week to Nov. 11, a Reuters poll showed on Monday ahead of reports from the American Petroleum Institute due at 4:30 p.m. ET (2130 GMT) on Tuesday.
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