Doha: 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.
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.
Meanwhile, the US oil rig count, an indication of future supply, rose six to 580 this week, their highest since March 2020. In another red flag for demand, Shanghai and Beijing went back on COVID-19 alert on Thursday. Parts of Shanghai, China’s largest economic hub, imposed new lockdown restrictions and the city announced a round of mass testing for millions of residents.
The most populous district in the Chinese capital, meanwhile, announced the shutdown of entertainment venues.
Asian spot liquefied natural gas (LNG) prices were down last week on renewed lockdown in Shanghai, indicating lesser demand from China, while summer procurement in other Asian countries picked up.
The news of an at least three-week shutdown at Freeport LNG, operator of one of the largest US export plants producing liquefied natural gas, did not affect Asian prices much, as most of the cargoes were headed to Europe.
The outage at the plant, which provides around 20 percent of US LNG processing capacity, began with an explosion at its Texas Gulf Coast facility on Wednesday.
The average LNG price for July delivery into north-east Asia was estimated at $23.5 per metric million British thermal units (mmBtu), down $1.25 from the previous week.
Meanwhile, industry sources said that the Freeport outage - which coincides with Nord Stream 1 maintenance and some Norwegian gas maintenance measures - would potentially push Europe to withdraw some volumes from storage.
