(Bloomberg) — Oil continued its steep selloff, tumbling to the lowest in more than six weeks as demand concerns resurface.
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Brent futures fell as much as 3.4% below to trade below $90 for the first time since early October. China, the world’s biggest crude importer, continues to grapple with rising Covid cases that traders fear will hit consumption.
“Worries over China is one of the main focus areas right now, where Covid cases are on the rise again and investors fear more lockdowns are likely,” said Fawad Razaqzada, market analyst at City Index.
Adding to bearish headwinds, JPMorgan Chase & Co. projected the US will enter a “mild” recession next year due to interest-rate hikes, while a stronger dollar made commodities priced in the currency more expensive.
Despite a barrage of geopolitical headlines this week, from a missile landing in Poland to an attack on a tanker in the Middle East, oil remains rangebound. Prices have been largely wedged between $90 and $100 since August. Traders continue to await the full impact of sanctions on Russian oil and a potential global economic slowdown.
Oil traders are also having to grapple with surging rates to charter ships to haul oil across the globe. On Wednesday, benchmark earnings for supertankers that can haul 2 million barrels jumped above $96,000 a day. Ships on the US-to-China route now cost almost $15 million, the most since April 2020. The strength in freight is weighing on the crude market’s structure, the Citigroup analysts said. Brent and WTI futures curves have weakened markedly over the last week, though near-term prices are still higher than later-dated contracts, indicating tight supplies.
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