Oil futures: Crude prices retreat on China growth concerns, weak US housing data
Quantum Commodity Intelligence - Crude oil futures Wednesday were trading lower as concerns over China and broader recessionary fears continue to weigh on sentiment and keep the market in a state of flux.
Front-month February ICE Brent futures were trading at $83.17/b (2005 GMT), compared to Tuesday's settle of $84.33/b, while the more-liquid Mar23 contract was trading at $83.79/b.
At the same time, Feb23 NYMEX WTI was trading $78.76/b versus Tuesday's settle of $79.53/b.
Markets found support this week after China announced it was lifting many Covid restrictions, but the surge in cases has put a dampener on any immediate hopes of an economic recovery.
While Beijing has stopped issuing figures on the number of cases, reports indicate the country has been gripped by a rapid spread of new cases.
"The tricky part is that even though the Chinese government is working hard to open the domestic economy with an easing of Covid measures or even eliminating most of them, the timing is not perfect," analysts from ING said, referencing the spread of Covid.
Economic outlook also received a knock as figures from the National Association of Realtors (NAR) showed pending-home US sales fell 4% in November, which is the sixth straight monthly drop.
"Pending home sales recorded the second-lowest monthly reading in 20 years as interest rates, which climbed at one of the fastest paces on record this year, drastically cut into the number of contract signings to buy a home," said NAR Chief Economist Lawrence Yun. "Falling home sales and construction have hurt broader economic activity."
Energy prices had found support this week from the lingering impact of Storm Elliot in the US, which has shut-in oil and gas output and reduced refinery runs.
Latest reports from the US indicate output of about 450,000-500,000 bpd was curtailed over Christmas weekend in the Bakken oilfields, although production is now being restored as the storm passes.
Adding to market uncertainty, Russia has banned oil exports to countries that enforce a $60/b price cap on its oil barrels for five months as it looks to respond to western-led pressure on its energy industry and tax revenues.
In a long-awaited response to the G7-led price cap, a decree signed by President Vladimir Putin on Wednesday said exports of crude oil and oil products are prohibited from 1 February-1 July to countries that have observed the price cap.
