Oil down over negative demand outlook, surging COVID cases in China

By Sibel Morrow

ANKARA (AA) - Oil prices fell on Tuesday as demand concerns remained in the spotlight following OPEC's revision of its demand growth forecast, and COVID cases in China, the world's second largest oil consumer, added to the downward price pressure.

International benchmark Brent crude traded at $92.79 per barrel at 09.40 a.m. local time (0640 GMT), a 0.37% decrease from the closing price of $93.14 a barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $85.27 per barrel at the same time, a 0.70% loss after the previous session closed at $85.87 a barrel.

China's strict "zero-COVID" policy, which includes immediate lockdowns, widespread testing, intensive contact tracing, and quarantines to eliminate infections as soon as they emerge, remains the oil market's elephant in the room.

"While this raises hopes for a demand recovery, surging case numbers continue to be a key downside risk. Another round of lockdowns cannot be ruled out if cases keep rising," Australia and New Zealand Banking Group (ANZ) Commodity Strategist Daniel Hynes said in an e-mailed note.

The country announced its decision to shorten the quarantine period for visitors to China and lift some restrictions on international flights last week.

Meanwhile, the Organization of Petroleum Exporting Countries (OPEC) reduced global oil demand growth forecasts for 2022 and 2023 by 0.1 million barrels per day (bpd), putting further downward pressure on prices.