Oil prices set to fall for second week on fears of China curbs

Oil prices set to fall for second week on fears of China curbs

After a slight rebound in the previous session, oil prices went down on Friday, leaving them poised to fall for a second straight week on fears that central banks' aggressive rate hikes and China's COVID 19 curbs will hurt demand.

After rising 1.3% on Thursday, the price of crude futures fell 12 cents, or 0.1%, to $89.03 a barrel at 0051 GMT.

US West Texas Intermediate WTI crude futures fell 19 cents, or 0.2%, to $83.35 a barrel, after climbing 2% in the previous session.

Both benchmarks were down about 4% for the week, with the market sliding one point to its lowest level since January.

The drop came despite a short output cut by the Organization of the Petroleum Exporting Countries, OPEC, and allies, together called OPEC Russia's threat to cut oil flows to any country that supports a price cap on its crude, and a weaker outlook for US oil production growth.

The US Energy Information Administration said it expected US crude output to rise by 540,000 barrels per day to 11.79 million barrels per day in 2022, down from an earlier forecast for a 610,000 barrels per day increase.

In light of the supply outlook, the sell-off, which sent the 50 day moving average below the 200 day moving average mid-week, may have been overdone, as demand in China, the world's biggest oil importer, could recover quickly, according to analysts.

China's demand is more difficult to predict, but a post-COVID reopening has previously seen a snap back rather than a gradual rise in demand. The fundamentals appear skewed against the latest technical signals, National Australia Bank analysts said in a note.

The curbs are tighter in China. On Thursday, the city of Chengdu extended a lock down for most of its more than 21 million residents while millions more in other parts of China were urged not to travel during the upcoming holidays.