As China’s COVID protests cause demand concerns, oil prices decline
Oil prices slumped on Monday as street protests for strict COVID-19 curbs in China, the world’s biggest crude importer stoked concern about the outlook for fuel demand.
Brent crude dropped $2.43, or 2.9%, to trade at $81.20 a barrel at 0731 GMT, after diving more than 3% to $80.61 earlier in the session – its lowest since Jan. 4.
U.S. West Texas Intermediate (WTI) crude slid $2.16, or 2.8%, to $74.12 a barrel. It fell as far as $73.60 earlier, its lowest since Dec. 22, 2021.
Both benchmarks, which hit 10-month lows last week, have posted three consecutive weekly declines. Brent ended the latest week down 4.6%, while WTI fell 4.7%.
“On top of growing concerns about weaker fuel demand in China due to a surge in COVID-19 cases, political uncertainty, caused by rare protests over the government’s stringent COVID restrictions in Shanghai, prompted selling,” said Hiroyuki Kikukawa, general manager of research at Nissan (OTC: NSAN) Securities.
WTI’s trading range is expected to fall to $70-$75, he said, adding the market could stay volatile depending on the outcome of an upcoming OPEC+ meeting on output and the level of the forthcoming G7 price cap on Russian oil.
China has stuck with President Xi Jinping’s zero-COVID policy even as much of the world has lifted most restrictions.
Hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over China’s strict COVID restrictions flared for the third day and spread to several cities in the wake of a deadly fire in the country’s far west.
“Bearish sentiment is growing in the oil market with mounting concerns over demand in China and a lack of clear signs from oil producers to further cut output,” said Tetsu Emori, CEO of Emori Fund Management Inc.
