Oil was down on Friday morning in Asia as worries over new COVID-19 lockdown measures in Shanghai grew despite a robust fuel demand in the U.S.
Brent oil futures fell 0.71% to $122.20 by 12:01 AM ET (4:02 AM GMT) and crude oil WTI futures were down 0.65% to $120.73. However, Brent is set for a fourth consecutively weekly gain and WTI is set for a seventh weekly increase in a row.
Shanghai imposed new partial lockdowns after China’s largest economic hub recorded a cluster outbreak of COVID-19, which adds to the market worries about denting global fuel demand.
“Shanghai’s new pandemic restrictions raised concerns over demand in China,” said Fujitomi Securities Co. Ltd. chief analyst Kazuhiko Saito.
“But losses were capped by expectations that tight global supply will continue with solid U.S. demand for fuels and slow increase in crude output by OPEC+,” he said.
Meanwhile, strong fuel demand in the U.S. during peak summer driving season capped the loss in crude prices.
On the supply side, the Organization of the Petroleum Exporting Countries and allies (OPEC+) agreed last week to accelerate production to tame soaring prices. But there is little space for producers to ramp up the output.