- Oil prices trim losses after bouncing up from $82.55.
- Concerns about the Chinese zero-COVID policy are hurting crude oil.
- The lower US oil reserves have avoided a further decline in prices.
WTI futures have picked up following a negative market opening on Monday. The West Texas intermediate retreated to $82.55 lows on the Asian and early European sessions to pare losses during the US session and return to the $84.70 area.
Concerns about China’s Zero-COVID policy
The confirmation of Chinese President Xi Jinping for an unprecedented third time over the weekend has hit crude prices. Investors are wary that his commitment to the Zero-COVID policy may lead to new lockdowns in the country that will, ultimately, depress demand for oil from the world’s major importer.
In this scenario, the upbeat Chinese GDP, which has shown a 3.9% yearly growth in the third quarter, beating market expectations of a 3.4% increase, has been practically unnoticed,
On the other hand, a European ban on Russian crude oil, expected to come into effect in December, as part of a new set of sanctions, for the Ukrainian war, is providing some support, as the eurozone leaders struggle to find alternative providers ahead of the winter.
Furthermore, official data revealed last week that the US Strategic Petroleum reserves have dropped to their lowest level since 1984 in the week of October 14th, while the EIA reported a 1.725M decline in crude oil inventories in the same week. These figures have avoided a sharper decline in crude prices.
Technical levels to watch
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