Oil slumps on fears over China's COVID restrictions and weak demand
Oil prices fell on Thursday as investors worried that global policymakers' aggressive rate hikes would slow economies and reduce fuel demand.
Brent crude futures were down 80 cents, or 0.8%, to $94.84 a barrel as of 0626 GMT. West Texas Intermediate (WTI) crude futures fell 85 cents, or 1%, to $88.70 a barrel.
Growing fears about weakening fuel demand due to aggressive rate hikes by the US and European central banks outweighed concerns about tight global supplies.
Recent signs of weakness in the Chinese economy and the stronger pandemic restrictions also weighed on sentiment.
Factory activity in China contracted for the first time in three months in August due to weakening demand, while power outages and new COVID-19 flare-ups disrupted production, according to a private sector survey.
South China tech hub Shenzhen has tightened restrictions as cases continue to rise as major events and indoor entertainment are suspended for three days in Baoan, the city's most populous district.
In the months after Russia sent military forces to Ukraine OPEC struggled to increase production followed by concerns about insufficient supply.
But production in both the Organization of the Petroleum Exporting Countries (OPEC) and the US rose to its highest level since the early days of the coronavirus pandemic.
According to surveys, OPEC's output reached 29.6 million barrels per day (bpd) in the last month, while US production rose to 11.82 million barrels per day in June. Both are at their highest levels since April 2020.
OPEC+ sources said that in 2022 the oil market will have a small surplus of just 0.4 million bpd.
The U.S. Energy Information Administration (EIA) said on Wednesday that U.S. crude oil inventories fell by 3.3 million barrels, while gasoline inventories fell by 1.2 million barrels.
The White House said the finance ministers of the Group of Seven clubs, made up of rich countries, will meet on Friday to discuss the US Biden administration's proposed price cap for Russian oil.
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