Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

Oil sinks below $100 as China’s lockdowns imperil demand outlook

© BloombergThe silhouettes of pumpjacks are seen above oil wells in the Bakken Formation in North Dakota, U.S. Photographer: Bloomberg Creative Photos/Bloomberg
The silhouettes of pumpjacks are seen above oil wells in the Bakken Formation in North Dakota, U.S. Photographer: Bloomberg Creative Photos/Bloomberg

Oil pushed lower at the start of the week on concerns that a spreading Covid-19 outbreak in China will weigh on global demand.

West Texas Intermediate futures slid around 3% to trade below $100 a barrel amid a rout in stocks and other raw materials. Rising cases in Beijing sparked jitters about an unprecedented lockdown of the capital, while Shanghai reported record daily deaths over the weekend. The world’s biggest crude importer is heading for the worst oil demand shock since the early days of the pandemic.

China’s travails with Covid-19 add another source of volatility to an oil market that’s been whipsawed by the Russian invasion of Ukraine. The war has fanned inflation, and the European Union is discussing measures to restrict oil imports from Russia. That could tighten the market and drive prices higher.

China has implemented lockdowns in a number of cities as it pursues a Covid Zero strategy. Residents in a Beijing district were told to submit to three days of virus testing starting Monday in a bid to snuff out a rash of cases in the area. Shanghai is entering its fourth week of strict lockdown.

The nation’s demand for gasoline, diesel and aviation fuel in April is expected to slide 20% from a year earlier, according to people with inside knowledge of China’s energy industry. That’s equivalent to a drop in crude oil consumption of 1.2 million barrels a day, they said.

“Demand worries are back in focus,” said Vandana Hari, founder of Vanda Insights in Singapore, citing China’s virus lockdowns and easing global economic growth. “Risk is skewed to the downside.”

Prices
WTI for June delivery fell 2.9% to $99.07 a barrel on the New York Mercantile Exchange at 7:02 a.m. in London.
Futures dropped 4.6% last week.
Brent for June settlement dropped 2.9% to $103.57 on the ICE Futures Europe exchange after losing 1.6% on Friday.

The market is poised for additional supply, adding to bearish signs. Libya is expected to resume output from shuttered fields in the coming days, while the CPC oil terminal on Russia’s Black Sea coast has resumed regular operations after one of two moorings damaged in a storm was repaired.

Brent remains in backwardation — a bullish structure where near-dated contracts are more expensive than later-dated ones — but it’s narrowed considerably since early March. The prompt timespread for the benchmark was 50 cents a barrel in backwardation, compared with a high of $4.64 on March 2.

Recommended for you

More from Energy Voice

Latest Posts