Oil falls on Beijing's COVID-19 warning and inflation concerns
Oil falls on Beijing's COVID-19 warning and inflation concerns
Oilprices dropped more than 2 dollars on Monday as a flare-up inCOVID-19cases in Beijing dashed hopes for a rapid pick-up in China's fuel demand, while worries about globalinflationandsluggish economic growth further depressed the market.
Brent crude futures fell 2.3 dollars, or 1.89 per cent, to 119.71 dollars a barrel by 0647 GMT, while USWest Texas Intermediate crude was at 118.4 dollarsa barrel, down 2.27 dollars, or 1.88 per cent.
Prices fell after Chinese officials warned on the weekend of a "ferocious" spread ofCOVID-19in the capital, where mass testing is planned until Wednesday.
"China remains the significant near-term downside risk, but most view the gradual normalisation of Chinese demandas a powerful positive foroil", Stephen Innes of SPI Asset Management said in a note.
That was despite the potential for lockdown noise in coming weeks, Innes added, with demandstill far from reflecting normal conditions.
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Both globaloilbenchmarks rose more than 1 per centlast week after data showed robustoildemandin the world's top consumer, the United States, despiteinflationconcerns.
Watch |Gravitas: Western powers want to fix Russian oil price?
Their rise was aided by hopes for a consumption rebound in the second-biggest global consumer China after lockdown measures were lifted starting June 1.
Concernsabout further interest rate hikes after Friday's red-hot US inflationdata are also weighing on global financial markets.
The US consumer price index increased a bigger-than-expected 8.6 per centlast month, in its largest annual increase since December1981, official figures showed, dashing hopes thatinflationhad peaked.
Also read |Mass COVID-19 testing announced for Beijing's Chaoyang district amid 'ferocious' outbreak
"Worries over slowing economic growth dampening global consumption in the comingmonthsandpersistentCOVIDcurbs in China denting its consumption in the short term are dominating market sentiment", Vandana Hari, founder of analysis provider Vanda Insights, said in a note.
Oilproducersandrefiners are running at full throttle to meet peak summer demand, while traders are watching closely for any possible impact from labour disputes in Libya, NorwayandSouth Korea onoilexportsandconsumption.
To boost supplies in the West, top exporter Saudi Arabia plans to divert some crude to Europe from China in July, traders said.
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