HONG KONG: Oil prices rebounded on Thursday after a day of demand losses linked to Covid-19 lockdowns in China as markets in Hong Kong and Shanghai fell sharply.
Ongoing restrictions in the East Asian country, including in the main economic hub of Shanghai – where millions of people remain confined to their homes – have affected transport networks.
But traders were balancing the demand shock with supply threats caused by war in Ukraine, with the European Union considering bans on Russian crude.
The United States said it would release a substantial portion of its reserves to cushion the deficit.
“I continue to expect Brent to remain in a choppy $100-$120 range, with WTI (West Texas Intermediate) in the $95-$115 range,” said senior analyst Jeffrey Halley. of the market at Oanda.
“A potential European oil embargo against Russia next week after the French elections this weekend could see a move up the range,” he added.
Hong Kong’s Hang Seng index continued its downward spiral and Shanghai closed more than 2% lower as news from China about Covid-19 restrictions, interest rate cuts and restrictions on tech companies remain a concern.
“Chinese markets continue to underperform, weighed down by growth fears and the Covid-zero policy on the mainland, while US fears of delisting of dual-listed shares also continue to cripple Hong Kong markets,” said Halley explained.
But elsewhere in Asia, markets were broadly higher, with the Japanese Nikkei 225 making the most significant gains and continuing a week of upward movement on optimism about the yen’s decline. But the Bank of Japan could face pressure on its lax policy.
Seoul, Jakarta, Mumbai and Sydney were all slightly higher.
Wall Street posted mixed results as losses from dwindling subscriptions to streaming giant Netflix also weighed on tech stocks in Hong Kong.
Investors are also cautiously awaiting comments from Federal Reserve Chairman Jerome Powell ahead of the next U.S. central bank meeting, with deep concerns about rate hikes.
“Feed [Chairman] Powell and the President of the ECB [Christine] Lagarde speaks at an IMF panel, while the Governor of the BoE (Bank of England) [Andrew] Bailey speaks at a separate event later [on] Thursday,” said Stephen Innes of SPI Asset Management.
“These central bankers, including Powell, are unlikely to push back market prices, suggesting that the recent rally in the global bond market is a respite on the path to higher yields,” he added. .
European markets, which had advanced on Wednesday on the news of a return to growth in February for industrial production in the euro zone, started mostly positively, with Paris and Frankfurt up and London down slightly.