FX.co ★ Oil is still getting cheaper, and China has not yet decided

Oil is getting cheaper for the third consecutive session. The trigger is unexpected reports that the Chinese authorities have finally begun to discuss the issue of the country's exit from severe restrictions. This is big news, as the world's largest oil importer and consumer has signaled that restrictions on its territory will be eased and public life is likely to resume: people will start traveling and spending oil savings inside their country.

The cost of January futures for Brent on the London ICE Futures exchange by 12:49 London time fell in price by 1.54% and amounted to $93.86 per barrel. By 6:39 p.m. Brent had dropped to $92.95.

The price of futures for WTI oil for December in electronic trading on the New York Mercantile Exchange was $87.52 per barrel during the daytime, falling by 1.53%. At 21:40, quotes fell to $86.17.

All this time, China has been desperately fighting the constantly emerging new outbreaks of coronavirus, imposing too strict restrictions on its population, reducing both public and business activity. All this led to the fact that the flourishing and actively developing economy of the country suddenly began to slow down, and the population's need for petroleum products significantly decreased.

And although recently the news background has been filled with hints about the lifting of restrictions in China, there have still been no concrete facts and actions on the part of the authorities on this matter. It is clear that softening the "zero tolerance for coronavirus" approach can accelerate economic growth in China and, accordingly, increase global demand for fuel, but the Beijing authorities are clearly in no hurry to make loud statements and change something drastically. In contrast, Chinese health officials said over the weekend that they would remain committed to strict restrictions for the time being.

All of this uncertainty has left oil markets on edge, especially as the number of new coronavirus infections has skyrocketed in Guangzhou and other Chinese cities, according to official figures. It is noted that the global manufacturing center is struggling with the worst outbreak in history.

Another factor weighing on quotes is the data from the American Petroleum Institute (API), which on Wednesday night told the world that the growth of US commercial stocks over the past week amounted to 5.6 million barrels. Official data showed that US commercial oil inventories rose by 3,925,000 barrels last week to 440.755 million barrels. Commodity stocks of gasoline decreased by 900,000 barrels (up to 205.733 million), stocks of distillates - by 521,000 barrels (up to 106.263 million).

In the context of a surplus in oil supply on the market, despite all the efforts of OPEC +, all these factors play against the active growth in oil prices.