Oil dropped the most in a week since April as the full weight of languishing Chinese demand and more economic tightening radically shifted the market’s sentiment.
West Texas Intermediate for December delivery fell 1.91 percent to US$80.08 a barrel. US futures fell 9.98 percent this week, the most since US President Joe Biden ordered a historic discharge of crude from the US’ Strategic Petroleum Reserve in April.
Brent crude for December delivery dropped 2.41 percent to US$87.62 a barrel, down 8.72 percent from a week earlier.
Swelling COVID-19 cases in China and aggressive monetary tightening by central banks have combined to erase all the gains earned last month when OPEC and its partners slashed production by 2 million barrels a day.
Pullbacks were evident along most of the oil-trading complex. On Friday, the US prompt-spread flipped into contango, a structure that signals oversupply, for the first time since last year.
Meanwhile, a deteriorating market for physical barrels has also weighed on prices, as demand for winter delivery cargoes has weakened.
The collapsing gauges of market health sent bulls running for the exits. Hedge funds slashed bullish bets for Brent crude the most in four months.
Money managers’ net long positions on the international benchmark fell about 30,000 contracts, data from the US Commodity Futures Trading Commission showed on Friday
Crude is trading below several key moving averages, sparking technical-based selling. A further collapse in the market’s structure on Friday added to the selling.
Coronavirus cases in China have climbed to near their highest level during the COVID-19 pandemic. The increases is likely to prove a test for any loosening of the country’s disease prevention rules.
Additional reporting by staff writer
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