Oil prices fell about 2% on Friday after China expanded its COVID-19 curbs, but the crude benchmarks were set for a weekly gain due to supply concerns and surprisingly strong economic data.
Brent futures fell $1.41, or 1.5%, to $95.55 a barrel by 12:27 p.m. EDT (1627 GMT). U.S. West Texas Intermediate (WTI) crude fell $1.25, or 1.4%, to $87.83.
U.S. gasoline futures dropped about 6%, while U.S. diesel futures rose about 3% to their highest since mid June.
“Diesel (was) still (the) strongest component of complex (with) shorts being squeezed out of the November contract ahead of Monday expiry,” analysts at energy consulting firm Ritterbusch and Associates said.
For the week, Brent was headed for a rise of about 2%, WTI about 3%.
Chinese cities ramped up COVID-19 curbs on Thursday, sealing up buildings and locking down districts in a scramble to halt widening outbreaks.
China registered 1,506 new COVID infections on Oct. 27, the National Health Commission said on Friday, up from 1,264 new cases a day earlier.
The International Monetary Fund expects China’s growth to slow to 3.2% this year, a downgrade of 1.2 points from its April projection, after an 8.1% rise in 2021.
“It’s hard to make a case for a rebound in China’s crude purchases given the backdrop of uncertainty over its zero-COVID policy,” said PVM Oil analyst Stephen Brennock.
PetroChina said China’s demand for refined fuel and natural gas was set to grow year-on-year in the fourth quarter in tandem with an expected economic recovery as Beijing rolls out more stimulus policy.
Also limiting losses was a strong rebound in U.S. gross domestic product (GDP) in the third quarter, reported on Thursday, demonstrating resilience in the world’s largest economy and oil consumer.
The German economy also grew unexpectedly in the third quarter, data showed on Friday, as Europe’s largest economy kept recession at bay despite high inflation and energy supply worries ahead of a looming European ban on Russian crude imports.
“The market remains wary of the impending deadlines for European purchases of Russian crude before the sanctions kick in on 5 December,” ANZ Research analysts said in a note.
Global oil-and-gas giants including Exxon Mobil, Chevron and Equinor posted huge third-quarter profits, benefiting from surging energy costs that have boosted inflation around the world.
Their outsized profits are feeding criticism from consumer groups in the United States and Europe. U.S. President Joe Biden has told oil companies they are not doing enough to bring down energy costs.
The Organization of the Petroleum Exporting Countries (OPEC) is likely to maintain its view world oil demand will rise for another decade.