Oil slumps 4% as Shanghai lockdowns stoke demand fears
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New York (Reuters) –Oil declined about 4% on Monday to the lowest in two weeks due to increased concerns about the prospect of global energy demand due to the prolonged covid -19 locking in Shanghai and the potential for rising U.S. Interest Rates.
“The prospect of slower economic growth this year amid the increase in interest rates … has led to the revision under the estimated oil demand,” Analysts said at the Eurasia Group Consultancy said, noted “the longer the Ukraine and Chinese War Lockdown survived, more and more high risk that demand growth will be weaker. “Misery Locking Covid-19 Shanghai was dragged to the fourth week, because orders for mass testing in Beijing’s largest district triggered concerns that Chinese capital can be destined for a similar fate.
China is the largest oil importer in the world.Brent Futures fell $ 4.33, or 4.1%, to settle $ 102.32 per barrel, while West Texas Intermediate (WTI) crude oil fell $ 3.53, or 3.5%, to complete $ 98.54 .Both benchmarks closed at the lowest since April 11 after losing almost 5% last week. Since it jumped to the highest since 2008 in early March, the price has collapsed around 25%.
The retreat triggered the U.S. speculators To cut their Futures position and clean options last week has been the lowest since April 2020.Interest in WTI Futures at New York Mercantile Exchange last week to the lowest since July 2016, while the daily -term volume dropped to the lowest this year.
Also pressing oil, the US dollar rose to the highest two years against a basket of other currencies on the possibility of an increase in the U.S. interest rate. Strong dollars make oil more expensive for other currency holders. [USD /]Oil received support at the beginning of the year from a strict supply after the Russian invasion on February 24 to Ukraine caused customers to avoid Russian oil due to Western sanctions. The market can tighten further if the European Union (EU) prohibits Russian crude oil.
EU is preparing “smart sanctions” on Russian oil imports, according to a report at the London Times who quoted the executive vice president of the European Commission, Valdis Dombrovskis.”Although the EU commission is working on the sixth sanction package against Russia, an oil export embargo from Russia seems impossible for now,” said Nikoline Bromander, senior analyst at Rystad Energy.
Russia NK Rosneft Pao failed to sell oil in a jumbo tender after demanding payment in advance in a ruble, which means the country’s top oil company must find a way to divert more crude oil to a private offer.
In the United States, which will reopen its embassy in Ukraine soon, officials say domestic oil and gas production will increase and will continue to increase for 1 million to 1.5 million barrels of oil per day that have been withdrawn from the market after the Russian invasion to Ukraine.French SE’s totalenergy has been chartering a tanker to load Abu Dhabi’s crude oil in early May for Europe, the first time the shipment in two years.
