Oil is getting cheaper amid a possible lockdown in China
2022.11.21 10:08
Oil is getting cheaper amid a possible lockdown in China
Budrigannews.com – Oil prices dropped on Monday as China said it was tightening COVID restrictions as more cases came in. This raised concerns about reduced demand at the world’s largest crude importer and how it would affect economic activity.
Futures were down 1% at $79.33 a barrel by 09:05 ET (14:05 GMT), and the Brent contract was down 0.9 percent at $86.80, close to two-month lows.
Friday’s closing prices for both benchmarks were the lowest they had been since Sept. 27, with Brent down 9% and US crude down 10%.
China reported its first COVID-19 deaths in several months, including three in Beijing. Meanwhile, nationwide case numbers exceeded their April highs due to outbreaks in Beijing and Shanghai, both of which were under localized lockdowns once more.
If the current wave of COVID outbreaks forces a return to more restrictive mobility measures, domestic demand in China is likely to decline significantly.
Goldman Sachs, a prominent investment bank, has reduced its fourth-quarter forecast by $10 a barrel to $100 in response to the increase in cases. This is the second forecast reduction since September.
The rise in the US dollar, which makes the commodity, which is denominated in dollars, more expensive for foreign buyers, also weighed on the crude market on Monday.
The, which compares the dollar to a basket of six other currencies, reached its highest level since November 11 on Monday.
Over the course of the most recent reporting week, speculators have reduced their net-long positions by almost 30,000 lots on the ICE Brent net-long and by just over 20,000 lots on the NYMEX WTI.
“This move was generally determined by yearns exchanging, as opposed to new shorts,” expressed experts at ING, in a note.
Regarding the supply situation, the Group of Seven price-cap plan and the imminent European Union ban on Russian seaborne flows are clouding the outlook. European buyers are said to have been stockpiling ahead of Dec. 5, when the ban is supposed to take effect.
Additionally, ING stated, “We could get more clarity on the G-7 price cap for Russian oil on Wednesday, including the level at which the group intends to set the cap.”On Thursday, EU energy ministers are also scheduled to meet to try to reach an agreement on their most recent regional energy measures.
