By Adedapo Adesanya
Crude oil prices stabilized on Thursday amid fears about the economic outlook for the world’s largest oil importer, China, weakening Brent crude futures contracts by $ 1.40 or 1.9% to 74 . $ 42 a barrel and US West Texas Intermediate (WTI) crude futures contracts by $ 1.42 or 2 percent to $ 70.94 a barrel.
The market has been taken in hand following the downgrading of the ratings of two Chinese real estate developers, just as some governments have taken measures to combat the Omicron variant of the coronavirus.
On Thursday, rating agency Fitch demoted real estate developers China Evergrande Group and Kaisa Group to “narrow default” status, saying they had defaulted on offshore bonds.
The news has heightened investor fears about the growth of the Chinese economy which, by extension, could impact the oil buying appetite of the world’s largest crude customer, market analysts said.
Their struggle to turn assets into cash had raised fears that a default would chill Chinese credit markets and trigger global shockwaves.
This comes after major economies continued to take more stringent measures to counter the spread of the Omicron variant.
Britain has imposed stricter COVID-19 restrictions on England, saying people should work from home where possible, wear masks in public places and show COVID-19 vaccine passes for access certain events and places.
Denmark is also planning new restrictions, including closing restaurants, bars and schools, while China has halted group tourist trips while South Korea, Singapore and Australia continue to have cases higher.
This is done even after laboratory evidence suggested that the Pfizer vaccine has a neutralizing effect on Omicron.
US inventory data released on Wednesday also weighed on prices later.
Data from the Energy Information Administration (EIA) showed crude inventories fell 240,000 barrels last week, far less than analysts expected.
In the United States, there was positive data as the number of Americans filing new jobless claims fell last week to the lowest level in more than 52 years amid an acute shortage of workers, according to new data released by the country’s labor department.