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Oil prices extend losses on growth concerns, Shanghai lockdown

(Reuters) -Oil costs prolonged losses on Friday, burdened by the prospect of rate of interest hikes, weaker world progress and COVID-19 lockdowns in China hurting demand, even because the European Union weighed a ban on Russian oil.

FILE PHOTO: Pumpjacks are seen throughout sundown on the Daqing oil area in Heilongjiang province, China August 22, 2019. Image taken August 22, 2019. REUTERS/Stringer

Brent crude futures had been down $1.30, or 1.2%, at $107.03 a barrel at 0603 GMT, whereas U.S. West Texas Intermediate (WTI) crude futures had declined $1.27, or 1.2%, to $102.52 a barrel.

Each benchmark contracts had been headed for weekly declines of round 4.2%.

This has been the least risky week of commerce since Russia launched its invasion of Ukraine on Feb. 24, sparking sanctions that minimize Russian oil provide and led consuming nations to launch a document quantity of oil from emergency shares. Moscow calls its actions in Ukraine a “particular operation”.

Issues concerning the Ukraine battle stoking inflation and denting financial progress dominated buying and selling within the second half of the week, with the Worldwide Financial Fund slashing its world progress forecast by practically a full proportion level.

China’s central financial institution governor, Yi Gang, stated on Friday that the world’s second-largest financial system was not resistant to exterior shocks and likewise confronted stress from COVID outbreaks.

The outlook for demand in China, the world’s largest oil importer, continues to weigh in the marketplace, as Shanghai authorities launch a brand new spherical of city-wide testing and warn residents their three-week lockdown can be lifted solely in batches as soon as transmission is stamped out.

Including to unfavourable sentiment for oil, hawkish remarks from U.S. Federal Reserve Chairman Jerome Powell on Thursday pointing to aggressive rate of interest will increase drove up the U.S. greenback, making oil dearer for consumers holding different currencies.

“Development considerations in China are weighing on oil costs in Asia in the present day, compounded by the fairness selloff that swept U.S. markets in a single day as fears elevated that Fed tightening may push the U.S. right into a slowdown as nicely,” Jeffrey Halley, a senior market analyst at OANDA, stated.

However all of that is available in a decent market, which may face even shorter provide if the European Union goes forward with a ban on Russian oil.

This doable embargo, ongoing sanctions on Russia, and the provision shortfall brought on by the Ukraine conflict will assist oil costs to stay sturdy in the long term, stated Tina Teng, an analyst at CMC Markets.

Reporting by Sonali Paul in Melbourne and Isabel Kua in Singapore; Modifying by Kenneth Maxwell and Bradley Perrett

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