Home Impact producer Oil slows as China lockdowns weigh on demand outlook

Oil slows as China lockdowns weigh on demand outlook

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Barrels of oil are pictured at the site of Canadian group Vermilion Energy in Parentis-en-Born, France, October 13, 2017. REUTERS/Regis Duvignau/

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  • OPEC+ set to stick with existing deal on May 5 – sources
  • China lockdowns weigh on oil demand outlook
  • Exxon declares force majeure on Russian Sakhalin-1

SINGAPORE, April 29 (Reuters) – Oil fell slightly on Friday as China’s COVID-19-related lockdowns weighed on the outlook for crude demand, although fears of supply disruptions as oil Western sanctions curb crude and product exports from Russia have supported prices.

Brent crude futures fell 4 cents to $107.55 a barrel at 0040 GMT after rising 2.1% in the previous session. The contract for the first month of June expires later on Friday. The more active July contract fell 30 cents to $106.96 a barrel.

U.S. West Texas Intermediate crude fell 49 cents, or 0.5%, to $104.87 a barrel after rising 3.3% on Thursday.

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Both contracts are expected to end the week higher, with WTI on track to post five consecutive months of gains, supported by the increased likelihood that Germany will join other European Union member states in a trade embargo. Russian oil. Read more

Still, oil prices have been volatile as Beijing has shown no signs of easing lockdown measures despite the impact on its economy and global supply chains.

“With the intensification of full and partial lockdowns since March, China’s economic indicators have dipped further into the red. We now expect China’s GDP to slow further in the second quarter,” said Yanting Zhou, head of Wood Mackenzie’s APAC economy, in a note.

“Oil market volatility is set to continue, with the potential for more widespread and prolonged lockdowns into May and beyond, skewing near-term risks for China’s oil demand – and prices – to the downside. .”

On supplies, OPEC+ is expected to stick to its existing deal and agree another small production increase for June at its May 5 meeting, six sources from the group told Reuters on Thursday. of producers. Read more

However, Russia’s oil production could fall by as much as 17% in 2022, an economy ministry document seen by Reuters showed on Wednesday, as Western sanctions imposed on Moscow over its invasion of Ukraine dragged down. hurt investment and exports. Russia calls it a “special military operation” to disarm Ukraine.

The sanctions have also made it increasingly difficult for Russian vessels to send oil to customers, prompting Exxon Mobil Corp (XOM.N) to declare force majeure for its Sakhalin-1 operations and to reduce its output. Read more

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Reporting by Florence Tan; edited by Richard Pullin

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