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Oil prices drop more than $2/barrel following new outbreak of COVID-19 in China

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SINGAPORE (ICIS) – Oil prices fell more than $2 a barrel on Monday on fears that fresh outbreaks of COVID-19 in China could lead to further shutdowns, which will weigh on fuel demand.

02:05 GMT
($/bbl)
Contract Down High Open Last Previous To change Low change

Brent

August

119.54

121.94

121.94

119.79

122.01

-2.22

-2.47

WTI

July

118.16

120.26

120.19

118.55

120.67

-2.12

-2.51

China’s financial hub of Shanghai reimposed an on-site dining ban, while Beijing delayed the reopening of most schools scheduled for this week as COVID-19 infection rates in both cities rose.

Shanghai and Beijing have also resumed mass testing for COVID-19.

Beijing authorities said on June 11 that the 61 new cases discovered in the city the previous day had either visited a bar or had links to it.

“The recent outbreak is highly explosive in nature and far-reaching in scope,” Xu Hejian, spokesperson for the Beijing municipal government, told a press briefing.

Beijing’s most populous district, Chaoyang, on June 12 announced three rounds of mass testing between June 13 and June 16, but the city did not announce any new lockdowns.

In Shanghai, officials over the weekend announced three new local confirmed cases detected outside quarantine zones on June 11, as all residents in 15 of its 16 districts underwent another round of COVID-19 tests.

The city lifted a strict two-month COVID-19 lockdown on June 1.

Mainland China reported 220 new coronavirus cases for June 12, of which 89 were symptomatic and 131 asymptomatic, the country’s National Health Commission said Monday.

That compared to 275 new cases a day earlier.

Meanwhile, concerns about further interest rate hikes following a sharp rise in US inflation data on June 10 are also weighing on global financial markets.

The consumer price index in the United States rose more than expected by 8.6% last month, the largest year-over-year increase since December 1981, according to figures from the Department of Labor on June 10.

Brent and WTI both rose more than 1% last week on data showing robust oil demand in the United States – the world’s biggest consumer – despite inflation concerns, and on hopes that the consumption in China may rebound after COVID-19 restrictions are lifted from June 1.

Focus article by Nurluqman Suratman

Thumbnail photo: Mass testing announced in Chaoyang District, Beijing after the COVID-19 outbreak, China – June 13, 2022. (By MARK R CRISTINO/EPA-EFE/Shutterstock)


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