Crude Oil Futures Settle Lower On Demand Concerns

Oil prices drifted lower on Friday as worries about outlook for energy demand resurfaced due to increased Covid-19 restrictions in parts of China.

According to a release from China’s National Health Commission, the country saw 1,506 new Covid-19 infections on Thursday, up from 1,264 new cases on Wednesday.

Following the surge in cases, fresh lockdowns hae been imposed in several cities in China, maintaining the country’s Covid Zero policy which has contributed to the reduction of economic activity in the world’s largest importer of crude.

West Texas Intermediate Crude oil futures for December ended lower by $1.18 or about 1.3% at $87.90 a barrel. WTI crude futures gained more than 3% in the week.

Brent crude futures were down $1.05 or 1.1% at 93.99 a barrel a little while ago.

Traders also reacted to the IMF’s forecast that says China’s growth will likely slow to 3.2% this year, down 1.2 points from the agency’s April projection. China had logged an 8.1% growth last year.

Traders now look ahead to the update from the Organization of the Petroleum Exporting Countries (OPEC) about its long-time oil demand forecasts, due on Monday.

A report from Baker Hughes today showed the number of total active drilling rigs in the United States fell 3 this week.

The total rig count slipped to 768 this week, 224 rigs higher than the rig count this time last year. Oil rigs in the United States fell 2 this week, to 610, while gas rigs fell 1 to 156. Miscellaneous rigs stayed the same at 2.

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