Prices for Brent crude continued to fluctuate in November as rising Covid infection rates in China and the resultant depression in demand create unrest in the market sentiment.

Fitch Solutions Country Risk & Industry Research noted in a recent report also adding that Chinese demand in the market also affects global oil demand and therefore prices and is forecast to account for around a third of total growth in 2023.

“While Beijing has eased some of its more stringent containment measures, it says it remains committed to its zero-Covid policy, posing downside risks to economic activity and oil consumption next year,” the report said.

“More generally, decelerating global real GDP growth, heightened recession risks in Europe and the U.S., risk-off market sentiment as well as a strong dollar are all posing headwinds to risk assets like oil. That said, we maintain a bullish outlook on the supply side, as Russian production and exports face deepening declines,” the analysts added.

“The imposition of the EU’s ban on sea-borne imports of Russian crude, to come into effect on December 5, and potential disruptions stemming from the proposed G7 price cap, will likely tighten the market further, coinciding with a slowdown in strategic storage releases and falling output among OPEC+,” the analysts continued.

As demand and supply-side drivers pull the market in opposite directions, trading will likely remain choppy in the short term, the Fitch Solutions analysts outlined in the report. They added, however, that they were holding on to their forecast for Brent crude to average $95 per barrel in 2023, down from $102 per barrel in 2022.

The Brent crude price has fallen from a close of $98.57 per barrel on November 4 to under $87 per barrel today, Nov. 23.