Good news for purchasing power. Oil accelerated its decline on Friday after a week of staggering losses, investors worried about a resurgence of Covid-19 cases in China, in addition to a depressed global economic outlook.
At around 4:10 p.m., a barrel of American West Texas Intermediate (WTI) for December delivery was down 3.91% to $78.45.
Its European equivalent, North Sea Brent for January 2023 delivery fell 3.85% to $86.32 a barrel.
China, “the world’s largest oil importer, is facing its worst epidemic resurgence in months,” says Lukman Otunuga.
The National Health Commission (NHC) on Thursday reported the highest number of new coronavirus cases in China since April.
Thus, on the investor side, “nobody seems tempted to take long positions in oil before the weekend” with the increase in cases of Covid-19 in China, says Stephen Innes of SPI.
Towards the nadir of 2022
Brent crude was near the bottom of $85 a barrel on Friday. The two world benchmark crudes are thus close to their September levels, when they were at their lowest level since January.
This then motivated the decision of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to drastically reduce the production goal of 2 million barrels per day for November.
The alliance then justified itself by arguing that the prices did not reflect the current tensions on the world supply of crude oil.
Prices, if they remain at this level, could “test the patience” of the group, according to Craig Erlam, who could make further cuts at the next meeting scheduled for early December.
Source: BFM TV
