Brent crude (BRN1!) futures had dropped 62 cents, or 0.59%, to $104.70 a barrel by 0712 GMT. U.S. West Texas Intermediate crude (CL1!) futures fell 48 cents, or 0.47%, to $101.54 a barrel.
On Wednesday, both contracts had settled over 30 cents higher on concerns regarding tight worldwide oil supplies and another drawdown in U.S. distillate and gasoline stocks.
The U.S. Energy Information Administration stated crude stocks increased by just 692,000 barrels last week, short of expectations. Nevertheless, distillate inventories, including diesel and jet fuel, fell lowest after May 2008.
In China, Beijing shut some public spaces and stepped up coronavirus checks at others on Thursday; most of the city’s 22 million residents launched more mass testing aimed at averting a Shanghai-like lockdown; The city has disrupted factories and supply chains, increasing concerns regarding the outlook for the country’s economic growth.
According to Stephen Innes, managing partner at SPI Asset Management, lockdown in China remains top of mind and the main opposing driver (to the upside to prices).
The Slowdown in Global Growth
Notwithstanding the oil demand worries regarding China, Asia’s biggest oil refiner, Sinopec Corp (600028), expects the country’s need for refined oil products to recover in the second quarter as COVID-19 outbreaks are gradually controlled.
Analysts also said that a slowdown in global growth because of higher commodity prices and an escalation in the Russia-Ukraine conflict could further deepen concerns about oil demand.
Investors are attempting to balance supply and demand concerns over Russian oil-and-gas disruption; moreover, there’s a worsening global economic outlook, said Ajay Kedia, director of energy consultancy Kedia Advisory.
The global economy will expand more slowly than expected three months ago, according to Reuters polls of over 500 economists.
