NEW YORK- Oil prices fell on Friday, after US consumer prices rose more than expected and China imposed new COVID-19 lockdown measures.
Brent crude fell $1.06 to settle at $122.01 a barrel. US West Texas Intermediate crude fell 84 cents to settle at $120.67 a barrel.
Both benchmarks still posted weekly gains, 1.9 percent for Brent and 1.5 percent for WTI.
For the day, oil prices sank along with Wall Street stocks after news that US consumer prices accelerated in May. Gasoline prices have hit a record high and the cost of food has soared, leading to the largest annual increase in about 40 years. That raises expectations that the Federal Reserve will tighten policy more aggressively.
“The concern is that could be a forward indicator of consumer habits and even though gasoline demand is strong now, it’s a sign in the future that if gasoline prices don’t stabilize then consumers will be cutting back,” said Phil Flynn, analyst at Price Futures.
In another red flag for demand, Shanghai and Beijing went back on COVID alert on Thursday. Parts of Shanghai imposed new lockdown restrictions and the city announced a round of mass testing for millions of residents.
China’s crude oil imports in May were up nearly 12 percent from a year earlier, when they were low.
“This does not indicate that oil demand is picking up. Instead, China is likely to have acted opportunistically, buying crude oil from Russia at a significantly lower price than the global market level in order to replenish its stocks,” Commerzbank analyst Carsten Fritsch said.
Oil had risen more than $1 earlier in the session from fears of a potential disruption in supplies in Europe and Africa. – Reuters
