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oil and gasNovember 17, 2022

Oil falls as geopolitical tensions ease, China COVID concerns return

Singapore, Nov. 17 (BNA): Oil prices fell for a second day in early Asian trade as concerns over geopolitical tensions eased and rising numbers of COVID-19 cases in China added to demand worries in the world's largest crude importer.

Brent crude futures dropped by 62 cents, or 0.7%, to $92.24 a barrel by 0110 GMT. US West Texas Intermediate (WTI) crude futures fell 65 cents, or 0.8%, to $84.94 a barrel, according to Reuters.

Oil prices eased despite a larger-than-expected draw in crude oil stockpiles in the United States, an official said.

Crude stocks in the US fell by 5.4 million barrels in the last week to 435.4 million barrels, the Energy Information Administration said on Wednesday, compared with expectations in a Reuters poll for a 440,000-barrel drop.

However, inventories of gasoline and distillate fuels both rose by more than expectations.

More oil is set to flow to the US as TC Energy lifted a force majeure on its 622,000-barrel-per-day Keystone pipeline that supplies the Midwest and Gulf Coast that had reduced shipments by 7%.

Sustained concerns of demand weakness in China are also 'keeping markets grounded,' said Stephen Innes, managing partner at SPI Asset Management, as it continues to report more COVID cases in major cities.

'With COVID cases in China continuing to rise, especially as we move towards flu season, traders are left with little option to recalibrate positions reflecting the possibility of more lockdowns in heavily populated centers that hurt oil demand exponentially more than other areas of the economy,' said Innes.

China's COVID caseload is small compared with the rest of the world, but it maintains stringent policies to quash out cases before they further spread.