Apr 28, 2022 12:46AM ET
By: AnalysisWatch
Oil prices tumbled down on Thursday as investors remained cautious on COVID-19 restrictions due to fading fuel demand in China, the world's biggest oil importer.
Brent crude futures fell $1.48, or 1.41%, to $103.84 a barrel by 12:26 AM ET. U.S. West Texas Intermediate crude futures fell $1.39, or 1.36%, to $100.63 a barrel.
Both contracts had gained more than 30 cents in the previous session on continued concerns about tight global supplies and a further decline in U.S. distillate and gasoline inventories.
According to the U.S. Energy Information Administration, crude oil inventories rose by only 692,000 barrels last week, falling short of expectations, while stocks of distillates, which include diesel and kerosene, fell to the lowest level since May 2008.
China's capital Beijing closed some public places Thursday and tightened controls elsewhere as most of the city's 22 million residents began more COVID-19 mass testing to avoid a Shanghai-style lockdown.
Asia's largest oil refiner, Sinopec Corp, expects China's demand for refined oil products to recover in the second quarter as COVID-19 outbreaks in the country are gradually brought under control.
Analysts also highlighted that a slowdown in global growth due to higher commodity prices and an escalation of the Russia-Ukraine conflict could further exacerbate oil demand concerns.
Investors are trying to find a balance between supply and demand, which is being disrupted by disruptions in Russian oil and gas supplies and a worsening global economic outlook, said Ajay Kedia, director of energy consultancy Kedia Advisory.
A Reuters poll of more than 500 economists found that the global economy will grow more slowly than predicted three months ago.
The median forecasts for global growth in Reuters surveys of more than 45 economies conducted this month were cut to 3.5% this year and 3.4% for 2023, down from 4.3% and 3.6% in a January poll.
By comparison, the International Monetary Fund forecasts growth of 3.6% for both years.