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Oil slips as bearish demand sentiment weighs on market

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Nov 16, 2022 - 10:02 AM

ISTANBUL (AA) – Oil prices slid on Wednesday over bearish demand indicators driven by a massive rise in US crude oil stockpiles, while surging COVID-19 cases in China further exacerbated demand fears.

International benchmark Brent crude traded at $93.23 per barrel at 09.49 a.m. local time (0649 GMT), a 0.67% decrease from the closing price of $93.86 a barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $86.22 per barrel at the same time, a 0.80% loss after the previous session closed at $86.92 a barrel.

Prices came under demand pressure after the American Petroleum Institute (API) announced late Tuesday its estimate of a rise of over 5.8 million barrels in US crude oil inventories, relative to the market expectation of a 400,000-barrel rise.

Significant inventory increases in the US, the world’s largest oil consumer, signaled weak demand.

Prices fell despite rising supply concerns after Russia’s pipeline monopoly Transneft announced that shipments via the Druzhba pipeline, which transports oil through Ukraine to Hungary, had ceased.

The Druzhba pipeline, also known as the Friendship Pipeline, is the main line carrying Russian oil to parts of Eastern and Central Europe.

Ukrainian authorities informed Transneft that it had stopped shipments due to a voltage drop on the line.

The pipeline suspension came after a suspected missile attack in eastern Poland’s village of Przewodow, located a few kilometers from the border with Ukraine.

The explosion occurred 500–600 meters from a primary school, and the area near the explosion site has been closed.

China’s strict “zero-COVID” policy, which includes immediate lockdowns, widespread testing, intensive contact tracing, and quarantines to eliminate infections as soon as they emerge, continues to wreak havoc on market sentiment and drive down prices.

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