Oil prices fell more than 2% as demand concerns stemming from China’s prolonged COVID-19 lockdown outweighed the prospect of a European embargo on Russian crude.
Oil prices fell more than 2% on Tuesday as demand concerns stemming from China’s prolonged COVID-19 lockdown outweighed the prospect of a European embargo on Russian crude.
Beijing has been conducting large-scale testing over the past month to defy a similar lockdown to Shanghai. Restaurants in the capital were closed for eating out, while some apartment blocks were closed.
Brent crude was down $2.61, or 2.4%, at $104.97 a barrel. US West Texas Intermediate (WTI) crude was down $2.76, or 2.6%, at $102.41.
“There are genuine concerns about whether Chinese demand, which is a big factor in global demand, will remain strong in 2022,” said Gary Cunningham, director of Tradition Energy.
Prices remain high, however, with Brent crude reaching $139 in March, the highest level since 2008, when Russia’s invasion of Ukraine heightened supply concerns that were already at a standstill. was running a rally.
The European Union is working on a sixth round of sanctions against Russia, officials say, with European Commission President Ursula von der Leyen expected to announce plans on Wednesday, including a ban on Russian oil imports by the end of this year. Including restrictions.
Phil Flynn, an analyst at Price Futures Group, said price action is likely to remain volatile as traders weigh against the West’s oil sanctions and the impact of China’s lockdown ahead of a US Federal Reserve meeting on Wednesday.
“We have a market that is in flux and reacting from headline to headline in a very choppy trading range,” Flynn said.
Also in focus will be the latest round of US Inventory and Supply reports. Nine analysts polled by Reuters estimated crude inventories fell by 800,000 barrels last week. [EIA/S]
The American Petroleum Institute industry group releases its inventory report at 4:30 p.m. EDT (2030 GMT), followed by government figures on Wednesday.
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