Oil prices retreated slightly on Thursday after gaining more than $3 in the prior session, with a strong dollar capping oil demand from buyers using other currencies and concerns over the faltering economic outlook clouding market sentiment. Brent oil prices were down 41 cents, or 0.5%, to $88.91 per barrel, while U.S. futures were down 35 cents, or 0.4%, to $81.80.
After this week’s nine-month lows in both benchmarks, which were reached due to a temporary drop in the dollar index and a larger-than-anticipated reduction in U.S. fuel inventories, there was a rebound in both benchmarks over the previous two sessions, raising hopes for a recovery in consumer demand. After the British government’s financial plans were revealed last week, which sent the sterling plummeting, the Bank of England pledged to purchase as many long-dated government bonds or gilts, as are required between Wednesday and October 14 to stabilize the currency.
In light of anticipated weaker demand and a higher currency, Goldman Sachs (NYSE: GS) lowered its oil price projection for 2023 on Tuesday. Travel for the seven-day national holiday is expected to be at its lowest level in years in China, the world’s largest importer of crude oil, as Beijing’s steadfast zero-COVID regulations encourage people to stay at home and economic difficulties restrain spending.
For the fourth quarter of 2022, Citi economists have revised their prediction for China’s GDP from 5% year-over-year growth to 4.6%.In a note published on Wednesday, Citi analysts stated that “strict zero-COVID regulations and a poor property sector continue to cloud growth forecasts.” On the other side of the globe, the European Union suggested fresh penalties on Russia for its invasion of Ukraine, including more stringent trade restrictions, more specific blacklistings, and a cap on oil prices for third-world nations. To put them into practice, though, the 27 nations that make up the bloc’s will need to get over their own divisions.