Oil closes in fall, with an eye on China and ceiling for Russian oil

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Oil futures closed lower this Friday, the 25th, with the market eyeing possible problems in demand from China due to Covid-19 and discussions about the ceiling for Russian oil.

On the New York Mercantile Exchange (Nymex), WTI oil for January 2023 closed down 2.13% (US$1.66), at US$76.28 a barrel, while Brent for the same month traded on the Intercontinental Exchange (ICE) closed down 2.69% (US$ 1.61), at US$ 83.63 a barrel. In the week, the retreats were 4.75% and 4.55% respectively.

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According to Capital Economics, the drivers for the drop in oil still revolve around the rise of Covid-19 in China, which has been reaching daily records of infections of the disease, hindering demand for oil.

According to Capital, another driver for oil has been discussions about the Russian oil ceiling. The discussed price cap of $65-70 a barrel, higher than current market prices, has left European Union countries divided, according to analysis.

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“Given that the price of Urals crude from Russia has already fallen within this range over the past week, this suggests that the cap may only have a limited impact on supply from Russia,” the analysis reads.

Yesterday, the president of the European Commission, Ursula von der Leyen, announced the preparation of a ninth package of sanctions against Russia and said she was “confident” in the approval of the price cap for Russian natural gas.

Also on the radar is the next meeting of the Organization of Petroleum Exporting Countries and allies (OPEC+) on December 4th.

Source: CNN Brasil

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