Oil futures ended lower on Friday as several Chinese cities widened COVID-19 curbs, threatening energy demand, but prices held onto a weekly gain.
West Texas Intermediate crude for December delivery
fell $1.18, or 1.3%, to settle at $87.90 a barrel on the New York Mercantile Exchange. It posted a nearly 3.4% weekly gain, according to Dow Jones Market Data.
December Brent crude
the global benchmark, fell $1.19, or 1.2%, to $95.77 a barrel on ICE Futures Europe, with the contract ending up 2.4% for the week. January Brent
the most actively traded contract, was off $1.27, or 1.3%, at $93.77 a barrel.
Back on Nymex, November gasoline
fell 3.5% to $2.9066 a gallon, ending 9.2% higher for the week, while November heating oil
rose 5% to $4.5498 a gallon, up 18.7% for the week.
December natural gas
fell nearly 3.3% to $5.684 per million British thermal units. Prices for the week rose 3.9%.
Guangzhou, China’s fourth-largest city by economic output, widened restrictions to keep people in their homes as a COVID resurgence entered its fourth week, Reuters reported.
China’s zero-COVID policies have been a drag on oil prices in 2022, crimping demand from one of the world’s largest consumers.
The positive price impact from the strong U.S. export demand and a possible Federal Reserve pivot on interest rates were “offset and more due to China’s widening COVID curbs,” Stephen Innes, managing partner at SPI Asset Management, told MarketWatch. The U.S. central bank is expected to hike interest rates in smaller increments after the monetary policy announcement on Nov. 2.
Wednesday’s Energy Information Administration data showed record-high exports of crude, “pointing to robust oil demand,” he said. That data also revealed a weekly fall in gasoline stockpiles.
“This data likely had traders wondering what demand destruction was everyone talking about last week,” said Innes.
Also, some oil longs based on a weaker U.S. dollar and Fed pivot “could be reduced ahead of next week’s FOMC meeting as lots of folks think it’s not time for the pivot party.”