November 10, 2022 [Quantum Commodity Intelligence] – Quantum Commodity Intelligence – Crude oil futures Monday were little changed as prices rebounded from earlier lows as the US dollar resumed its slide, shrugging off reports that China is set to stick with its zero-Covid policy with cases continuing to rise across the country.
Front-month January ICE Brent futures were trading at $98.44/b (1805 GMT), compared to the day’s low of $96.50/b and Friday’s settle of $98.57/b. Prices also hit a two-month high of $99.56/b in London afternoon trading.
Dec22 NYMEX WTI was trading $92.49/b versus Friday’s settle of $92.61/b.
Beijing quashed last week’s optimism for easing the country’s strict zero-Covid restrictions, as China’s National Health Commission reiterated the country’s commitment to eliminating Covid-19 at a press conference on Saturday.
The NHC warned that the situation was set to become even “more severe and complex” amid the winter flu season, which was seen as extinguishing any lingering hopes of a shift in policy.
However, despite the official comments rumours continued to persist that Beijing could still relax restrictions in the new year.
“The oil price remains caught between demand and supply concerns,” said Carsten Fritsch of Commerzbank. “The increase in export quotas should give a boost to crude oil processing in China, but renewed lockdowns will probably preclude any excessive optimism.”
On a more positive note, Chinese crude imports rose 5% on the month to the highest level since May and the most in the month of October since before the pandemic fuel demand improved, data from China Customs showed.
However, China on Sunday reported its highest number of new Covid infections in six months, recording nearly 4,500 new locally transmitted infections on Saturday, the NHC said, which is the most since early May.
Mobility in China measured by movement of population in and out of the biggest 100 cities has fallen to the lowest level in three months, according to Baidu search engine.
The index, which is measured by tracking mobile phones on a rolling seven-day average basis, shows mobility is around 20% lower than in October and at its lowest level since August.
Meanwhile, China’s trade data fell far below expectations, with exports falling by 0.3% in October and imports falling by 0.7%.
Prices stabilised over the day as the dollar index resumed its slide Monday, falling over 0.5% to under 110.50 points, having already slumped by around 1.5% Friday.
US Deputy Treasury Secretary Wally Adeyemo will travel to Europe this week to discuss sanctions on Moscow and the implementation of what is likely to be a fixed-price cap on Russian crude exports rather than a floating-price mechanism.
Uncertainty over Russian supplies is seen as lending support for oil markets, as Moscow said it would not supply countries operating within the price cap.