Oil futures lost ground Tuesday as investors remained uncertain about the outlook for crude demand from China.
Price action
-
West Texas Intermediate crude for December delivery
CL00,
-1.02% CLZ22,
-1.02%
fell 68 cents, or 0.7%, $91.11 a barrel on the New York Mercantile Exchange. -
January Brent crude
BRN00,
-0.73% BRNF23,
-0.73% ,
the global benchmark, was down 44 cents, or 0.4%, at $97.48 a barrel on ICE Futures Europe. -
Back on Nymex, December gasoline
RBZ22,
-0.78%
fell 0.4% to $2.644 a gallon, while December heating oil
HOZ22,
+0.15%
was up 0.6% at $3.802 a gallon. -
December natural gas
NGZ22,
-5.79%
dropped 5.3% to $6.573 per million British thermal units.
Market drivers
Oil futures have been buffeted by uncertainty around China’s zero-COVID policy, which has been seen keeping a lid on crude prices. Oil was lifted last week on rumors circulating on Chinese social media that officials were weighing a relaxation of the policy. Weekend news reports saw officials deny speculation around easing restrictions, but crude was lifted early Monday after The Wall Street Journal reported Chinese leaders were considering steps toward reopening, but were proceeding slowly and had no timeline.
Those gains were given back by the closing bell.
“The lack of a concrete timeline or any real details about plans to reopen the Chinese economy and move away from the still very strict and economically crippling restrictions weighed on the energy market into the afternoon,” wrote analysts at Sevens Report Research.
For now, however, the near-term trend still favors the bulls, they said. The $93.20 closing high for WTI from October is a key resistance level keeping crude in a trading range between roughly $78 and $93 a barrel, they said.
“This week, midterm election results, CPI data (if its dovish), or further developments in China regarding Covid restrictions could help drive futures through resistance and to new multimonth closing highs,” they wrote.
