MELBOURNE, Nov 10 (Reuters) – Oil extended losses on Thursday for a fourth consecutive session, as renewed COVID curbs in China, the world’s biggest crude importer, weighed on the market and traders await US inflation data for clues on further interest rate increases.
Brent crude futures fell 41 cents, or 0.4%, to $92.24 a barrel at 0733 GMT. US West Texas Intermediate (WTI) crude futures were down 48 cents, or 0.6%, at $85.35 a barrel.
Brent prices have dropped more than 6% so far this week, while WTI is down more than 7%.
The manufacturing hub of Guangzhou, a city of 19 million people, on Thursday reported more than 2,000 new cases for Nov. 9, the third day above that level, in the city’s worst outbreak so far. Millions of residents were told to get tested for COVID-19 on Wednesday, and one city district was locked down, as local cases across China reached their highest since April 30.
On Thursday, the United States will release consumer price index (CPI) data that is expected to show a slowdown in the inflation rate for both the monthly and yearly core numbers. That may lead the US Federal Reserve to reduce the size of its planned interest rate increases, which would be considered positive for economic and oil demand growth.
Prices were also under pressure after a big build in US crude inventories reported on Wednesday.
“The outlook for oil prices has become more cautious,” said analysts from Haitong Futures in Shanghai.
“The US CPI data … will further affect market expectations from the macro level, which further increases the market’s wait-and-see sentiment.”
US crude oil stockpiles rose by 3.9 million barrels last week, the Energy Information Administration said, taking inventories to their highest since July 2021. [EIA/S]
However, gasoline inventories fell by 900,000 barrels to their lowest since November 2014 and distillate stockpiles fell by 500,000 barrels.
Bearishness around the rise in US crude oil stockpiles may have been overdone, Commonwealth Bank analyst Vivek Dhar said.
He noted that distillate stockpiles, which include diesel, heating oil and jet fuel, fell to their lowest in a decade and that the number of days those inventories can meet demand is at 26, nearly five days below the five-year average, “indicating much tighter conditions than US oil or gasoline markets”.
Dhar forecast in a note to clients that Brent will average about $95 a barrel in the fourth quarter because supplies will tighten with the implementation on Dec. 5 of the European Union’s ban on Russian seaborne oil imports.
Reporting by Sonali Paul in Melbourne and Muyu Xu in Singapore; Editing by Christian Schmollinger and Tom Hogue
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