UPDATE 8-Oil prices fall 2% as Chinese demand worries linger


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      Brent, WTI fall for third consecutive week

      EU delays talks on Russian oil price cap until next week

      Poland seeks German support for EU sanctions on pipeline

 (Updates with settlement prices, adds market activity)
    By Stephanie Kelly
       NEW YORK, Nov 25 (Reuters) - Oil prices fell 2% on
Friday in thin market liquidity, closing a week marked by
worries about Chinese demand and haggling over a Western price
cap on Russian oil.
    Brent crude  LCOc1  futures settled down $1.71, or 2%, to
trade at $83.63 a barrel, having retraced some earlier gains.
    U.S. West Texas Intermediate (WTI) crude  CLc1  futures were
down $1.66, or 2.1%, at $76.28 a barrel. There was no WTI
settlement on Thursday due to the U.S. Thanksgiving holiday and
trading volumes remained low. 
    "Because there's light volume after the holiday, we're
giving up some of the gains here a bit," said Phil Flynn, an
analyst at Price Futures group. 
    Both contracts posted their third consecutive weekly
declines after hitting 10-month lows this week. Brent ended the
week down 4.6%, while WTI fell 4.7%.
    Brent and WTI's market structure implies current demand is
softening, with backwardation, defined by front-month prices
trading above contracts for later delivery, having weakened
markedly in recent sessions  LCOc1-LCOc7   CLc1-CLc7 .
    For two-month spreads  LCOc1-LCOc2   CLc1-CLc2 , Brent and
WTI's structures even dipped into contango this week, implying
oversupply with near-term delivery contracts priced below later
    China, the world's top oil importer, on Friday reported a
new daily record for COVID-19 infections, as cities across the
country continued to enforce mobility measures and other curbs
to control outbreaks.
    This is starting to hit fuel demand, with traffic drifting
down and implied oil demand around 1 million barrels per day
lower than average, an ANZ note showed.
    Meanwhile, G7 and European Union diplomats have been
discussing a Russian oil price cap between $65 and $70 a barrel,
but an agreement has still not been reached. A meeting of
European Union government representatives, scheduled for Friday
evening to discuss the proposal, was cancelled, EU diplomats
    The aim is to limit revenue to fund Moscow's military
offensive in Ukraine without disrupting global oil markets, but
the proposed level is broadly in line with what Asian buyers are
already paying.
    Poland is seeking German support to slap EU sanctions on the
Polish-German section of the Druzhba crude pipeline so Warsaw
can abandon a deal to buy Russian oil next year without paying
penalties, two sources familiar with the talks said. 
    Trading is expected to remain cautious ahead of an agreement
on the price cap, due to come into effect on Dec. 5 when an EU 
ban on Russian crude kicks off, and ahead of the next meeting of
the Organization of the Petroleum Exporting Countries and allies
on Dec. 4.
 (Reporting by Stephanie Kelly in New York; Additional reporting
by Shadia Nasralla in London, Sonali Paul in Melbourne and
Trixie Yap in Singapore; Editing by Marguerita Choy, Kirsten
Donovan and Cynthia Osterman)
 ((Stephanie.Kelly@thomsonreuters.com; 646-223-4471; Reuters
Messaging: stephanie.kelly.thomsonreuters.com@reuters.net))

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