Oil prices higher, but poised for weekly drop

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Oil prices were moving higher on Friday, but headed for the first week of losses in three as investors juggled supply worries linked to Russia’s war in Ukraine and growth concerns stemming from China’s COVID battle.

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US crude prices are headed for a 1% weekly drop, the first in three, while Brent is poised for a 2.7% drop, also its first in three.

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“There are two opposing forces dictating the markets stance in relation to oil; supply side concerns support the price of the barrel, with the ongoing war in Ukraine and the prospect of the European Union imposing a full ban on imports of Russian oil likely to cause a drop in availability amid an already tight market,” said Ricardo Evangelista, senior analyst at ActiveTrades, in a note to clients.

“However, such price gains are capped by fears over the impact that inflation, and the slowing down of economic activity in China, due to the COVID related lockdowns, will have on demand,” said the analyst.

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The market was also considering the possibility of Russia cutting off natural gas to Finland over the latter’s move toward joining NATO in the wake of the Russian invasion of Ukraine. On Friday, Turkey reportedly voiced objection to Finland or Sweden joining NATO.

As it fights to wean off Russian energy overall, the EU has been struggling to push through a proposed ban on Russia oil, with Hungary voicing objections over the potential damage to its own economy.

Russia triggered a spike in natural-gas prices in Europe this week after a retaliatory action against Germany. Those prices eased back on Friday.

As for China, Shanghai is expected to reopen in a few days with its COVID-19 transmission subsiding, an official said Friday, according to the Associated Press. But that’s amid worries that Beijing will soon impose its own stricter lockdown. China is the world’s biggest importer of crude.

On the supply side, the Energy Information Administration said US crude inventories jumped by 8.5 million barrels last week, against expectations from analysts polled by S&P Global Commodity Insights who had forecast a fall of 1.8 million barrels.

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Credit: www.marketwatch.com /

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