Oil Sees Worst Weekly Loss In Five On Renewed China Covid Fears

NEW YORK (Pakistan Point News / Sputnik - 03rd September, 2022) Crude prices saw their worst weekly loss in five as China's lockdown of its technology hub Shenzhen to prevent a new coronavirus breakout raised concerns about energy consumption in the No. 1 oil importing nation.

Brent, the London-traded global benchmark for oil, settled Friday's trade up 66 cents, or 0.7%, at $93.02 per barrel, sharply off the day's peak of $95.28. For the week, Brent fell 6.4%, its most since the week ended July 29.

New York-traded West Texas Intermediate settled up 26 cents, or 0.3%, at $86.87 per barrel, after a session peak at $89.61. For the week, the US crude benchmark fell 6.7%.

Key districts in Shenzhen shut down public transport and extended curbs on public activities on Friday as cities across China battled fresh coronavirus outbreaks that have dampened the outlook for economic recovery, reports said.

Six districts comprising the majority of Shenzhen's population of almost 18 million announced that all residents would be tested twice for Covid-19 over the weekend as subway and bus services were suspended, the reports added.

China is the world's top importer and any curbs on the movement of its people can usually have detrimental effects on its crude consumption.

The weekly slump in oil came ahead of Monday's meeting of producers' alliance OPEC+, an event which typically sends crude prices higher.

The 13-member Saudi-led Organization of the Petroleum Exporting Countries and its 10 allies led by Russia � together known as OPEC+ � are to meet on Monday, to discuss production targets for October and beyond.

Initially, expectations had been heavy that OPEC+ will push for a production cut at the September 5 meeting in order to get oil prices up, and make up for the recent losses in crude prices.

But in recent days, most analysts had tamped down such expectations after OPEC+ put out an improved demand outlook for its oil. The 23-nation strong oil exporters' alliance reduced its 2022 surplus estimate by half to 400,000 barrels per day, while forecasting a 300,000 bpd deficit for 2023.

The improved demand outlook suggests that OPEC+ is confident about sales for its oil and wants to maintain production as it is, analysts.