Crude Oil Drops Slightly on Further Partial Lockdowns in Shanghai By Investing.com

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© Reuters

By Peter Nurse

Investing.com — Oil prices eased slightly on Thursday after new mobility restrictions were announced in Shanghai, but remain near three-month highs amid signs of economic recovery in the world’s second-largest economy.

As of 9:20 a.m. ET (1320 GMT), futures were trading down 0.5% at $121.51 a barrel, down from Monday’s three-month high, while the contract rose 0.3% to $123.18 a barrel.

The United States rose 0.8% to $4.2541 a gallon.

Parts of Shanghai began imposing new lockdown restrictions on Thursday, raising fears of further demand destruction at the world’s biggest crude importer, just over a week after the Chinese mall ended trading prolonged restrictions to control risks of COVID transmission.

That said, Chinese data for May indicates an economic recovery on this important engine of growth, with an increase of 16.9% on the year and growth of 4.1% year on year, the first in three months.

Additionally, China rose nearly 12% in May, albeit from a weak base a year earlier, with the country importing 45.83 million tonnes last month, or 10.79 million barrels per year. day. This compares to 10.5 million barrels per day in April and an average of 10.3 million barrels in 2021.

Meanwhile, strong demand in the United States, the world’s largest consumer of crude, continued to provide a floor for prices, as the summer driving season continues and drivers show resilience despite higher prices. at the exorbitant pump.

Official US data, released on Wednesday, showed a buildup of just over 2 million barrels of crude last week, while the US fell 812,000 barrels.

“That leaves U.S. gasoline inventories at just over 218 million barrels, closer to levels we typically see at the end of the driving season, not the start,” analysts said. ing in a note.

Elsewhere, prices soared in the UK and mainland Europe earlier on Thursday after a fire at an LNG export terminal in Texas threatened to cut off a vital supply channel for months.

The fire broke out Wednesday at the Freeport LNG facility on Quintana Island, near Houston, Texas. Although it was quickly brought under control, Bloomberg quoted a company spokesperson as saying shipments from the terminal could be halted for three months.

This comes as Europe increasingly turns to LNG as it tries to reduce its dependence on Russian gas.

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