# Oil prices ease to trade near 2-month lows on China demand fears, dollar strength Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-11-21 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Oil prices near two-month low as supply fears ease Meta Description: Oil prices slide as supply fears recede and demand from China weakens. U.S. dollar strength also weighs on prices. Analysts point to economic data and COVID URL: https://financedigest.com/oil-prices-ease-to-trade-near-2-month-lows-on-china-demand-fears-dollar-strengthhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-11-21t012811z1lynxmpeiak018rtroptp4global-oil-1736814843398-compressed.jpg) By Emily Chow SINGAPORE (Reuters) -Oil prices dropped to trade near two-month lows on Monday, having earlier slid by around $1 a barrel, as supply fears receded while concerns over fuel demand from China and U.S. dollar [strength weighed on prices](https://www.financedigest.com/analysis-to-raise-prices-or-not-consumer-goods-makers-weigh-bets-on-buyer-strength.html "Analysis-To raise prices or not? Consumer goods makers weigh bets on buyer strength"). Brent crude futures for January had slipped 74 cents, or 0.8%, to $86.88 a barrel by 0715 GMT. U.S. West Texas Intermediate (WTI) crude futures for December were at $79.40 a barrel, down 68 cents or 0.9%, [ahead of the contract’s expiry later](https://www.financedigest.com/wall-st-seen-steady-ahead-of-inflation-data-fed-later-in-week.html "Wall St seen steady ahead of inflation data, Fed later in week") on Monday. The more [active January contract](https://www.financedigest.com/asias-factory-activity-contracts-despite-chinas-covid-reopening.html "Asia’s factory activity contracts despite China’s COVID reopening") last fell 59 cents or 0.7% to $79.52 a barrel. Both benchmarks closed Friday at their [lowest since](https://www.financedigest.com/uk-mortgage-approvals-hit-lowest-since-june-2020.html "UK mortgage approvals hit lowest since June 2020") Sept. 27, [extending losses](https://www.financedigest.com/wall-street-set-to-open-higher-oil-prices-extend-losses.html "Wall Street set to open higher, oil prices extend losses") for a second week, with Brent down 9% and WTI 10% lower. Apart from the weakened demand outlook due to China’s [COVID curbs](https://www.financedigest.com/were-going-to-be-free-chinese-cheer-as-covid-curbs-are-loosened.html "‘We’re going to be free’: Chinese cheer as COVID curbs are loosened"), a rebound in the U.S. dollar today is also a bearish factor for [oil prices,”](https://www.financedigest.com/oil-ticks-up-as-u-s-inflation-cools-but-prices-set-for-monthly-drop.html "Oil ticks up as U.S. inflation cools, but prices set for monthly drop") said Tina Teng, a CMC Markets analyst. Risk sentiment becomes fragile as all the recent major countries’ [economic data](https://www.financedigest.com/dollar-skids-after-soft-u-s-economic-data-impact-of-opec-cuts-fades.html "Dollar skids after soft U.S. economic data; impact of OPEC+ cuts fades") point to a recessionary scenario, especially in the U.K. and [euro zone,”](https://www.financedigest.com/euro-zone-inflation-eases-in-feb-but-core-prices-pick-up.html "Euro zone inflation eases in Feb but core prices pick up") she said, adding that hawkish comments from the U.S. Federal Reserve last [week also sparked concerns](https://www.financedigest.com/oil-edges-up-but-on-track-for-big-weekly-drop-on-supply-concerns.html "Oil edges up but on track for big weekly drop on supply concerns") over the U.S. [economic outlook](https://www.financedigest.com/analysis-russians-feel-little-economic-pain-now-long-term-outlook-darkens.html "Analysis: Russians feel little economic pain now, long-term outlook darkens"). New COVID case numbers in China remained [close to April peaks as the country battles outbreaks](https://www.financedigest.com/nestle-closes-french-buitoni-factory-hit-by-e-coli-outbreak.html "Nestle closes French Buitoni factory hit by E.coli outbreak") nationwide and in major cities. Schools across some districts in the capital Beijing buckled down for online classes on Monday after officials asked residents to stay home, while the southern city of Guangzhou ordered a five-day lockdown for its most populous district. The front-month Brent crude futures spread narrowed sharply last week while WTI flipped into a contango, reflecting dwindling [supply concerns](https://www.financedigest.com/oil-gains-as-russian-supply-cuts-temper-concerns-over-rate-hikes-high-stocks.html "Oil gains as Russian supply cuts temper concerns over rate hikes, high stocks"). Meanwhile, tight crude supplies in [Europe have eased as refiners have piled](https://www.financedigest.com/analysis-rate-rises-pile-pain-on-sme-firms-in-u-s-and-europe.html "Analysis-Rate rises pile pain on SME firms in U.S. and Europe") up stocks ahead of the Dec. 5 European Union embargo on Russian crude, putting [pressure on physical crude](https://www.financedigest.com/oil-prices-dip-on-u-s-crude-reserve-release-inflation-pressure.html "Oil prices dip on U.S. crude reserve release, inflation pressure") markets across Europe, Africa and the United States. The EU’s energy [policy chief told Reuters the EU expected to have its regulations completed in time for the introduction of a G7 plan](https://www.financedigest.com/dutch-responds-to-us-china-policy-with-a-plan-to-curb-semiconductor-tech-exports.html "Dutch responds to US China policy with a plan to curb semiconductor tech exports") to cap the price of Russian crude on Dec. 5. RBC Capital analyst Mike Tran said the weak December WTI contract expiration indicated [paper market selling](https://www.financedigest.com/stora-enso-sells-paper-mill-to-german-lidl-owner-schwarz-group.html "Stora Enso sells paper mill to German Lidl owner Schwarz Group") rather than true physical market softness. “Tight global inventories do not support the traditional surplus of barrels rationale for contango,” he said in a note. While [North Sea](https://www.financedigest.com/offshore-crews-to-strike-on-bps-north-sea-installations-says-unite.html "Offshore crews to strike on BP’s North Sea installations, says Unite") and West African spot market indicators are far from strong, they are also not suggesting signs of distress, he added. Diesel [markets remained tight](https://www.financedigest.com/recruitment-in-a-candidate-tight-market.html "Recruitment in a Candidate Tight Market "), with Europe and the United States competing for barrels. While China [nearly doubled its diesel exports in October from a year](https://www.financedigest.com/germany-home-prices-to-sink-nearly-6-this-year-reuters-poll.html "Germany home prices to sink nearly 6% this year – Reuters Poll") earlier to 1.06 million tonnes, the volume was well below September’s 1.73 million tonnes. Demand in China, the [world’s top](https://www.financedigest.com/top-10-fastest-bikes-in-the-world.html "Top 10 fastest bikes in the world") crude importer, remains bogged down by COVID restrictions while expectations of further interest rate rises elsewhere have elevated the greenback, making dollar-denominated commodities more expensive for investors. (Reporting by Florence Tan and Emily Chow; Editing by Bradley Perrett and Kenneth Maxwell) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---