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By Florence Tan and Emily Chow
SINGAPORE (Reuters) – Oil costs fell on Monday following a weaker-than-expected taste of factory activity in China and fears that its escalating COVID-19 restrictions could demand.
Brent futures fell 63 cents, or 0. 7Array, to $95. 14 a barrel at 04:20 GMT, after falling 1. 2 on Friday.
U. S. West Texas Intermediate (WTI) crude. The U. S. economy at $87. 43 a barrel, it was down 47 cents, or 0. 5%, after stabilizing at 1. 3% on Friday.
“The contraction in purchasing managers’ index (PMI) knowledge adds to the post-oil market melancholy of China’s Congress Party. It’s hard to draw a direct line between weaker PMIs and China’s zero-COVID policy,” said Stephen Innes, managing partner. of SPI Asset Management.
“As long as COVID-zero remains entrenched, it will continue to thwart the oil bulls. “
Factory activity in China, the world’s largest crude importer, fell in October, an official survey revealed on Monday, hurt by slowing global demand and tight COVID-19 restrictions affecting production.
Chinese cities are doubling down on Beijing’s zero-COVID policy as outbreaks increase, discouraging previous hopes for a demand pickup.
Strict COVID-19 restrictions in China have slowed economic activity and reduced demand for oil. at least in 2014, as Beijing’s drastic COVID-19 restrictions hit fuel consumption hard.
Another threat to oil demand comes from Europe, CMC Markets analyst Leon Li said, as the continent “will likely go into recession this winter,” he said.
According to an S survey
Policymakers at the European Central Bank also plan to continue raising interest rates, even if it pushes the bloc into recession and stokes political resentment.
Meanwhile, some of the largest U. S. oil producers are still in the U. S. U. S. officials reported Friday that productivity and volume gains in the Permian Basin, the country’s shale box, were slowing.
The warnings came just as U. S. oil exports were being released. The U. S. hit a record high last week, which partly pushed WTI prices up 3. 4%. Brent rose 2. 4% last week, recording its moment of direct weekly gain.
In a statement to be released on Monday, the Organization of the Petroleum Exporting Countries is expected to stick to the call for oil expansion for another decade, despite the growing use of renewables and electric cars, two OPEC sources said.
(Reporting via Florence Tan and Emily Chow; Editing via Tom Hogue)