By Peter Nurse
Investing.com — Oil costs weakened Monday, weighed by considerations about weakened demand from China, the world’s prime crude importer, because it battles a sustained COVID-19 outbreak.
By 9:15 AM ET (1315 GMT), futures traded 1.5% decrease at $108.16 a barrel, whereas the contract fell 1.3% to $110.91 a barrel.
U.S. have been down 0.2% at $3.7508 a gallon.
China’s two largest cities, Beijing and Shanghai, tightened COVID-19 curbs on Monday because the world’s second-largest economic system continued its battle with a virus, severely limiting the motion of its residents at the same time as the remainder of the world has opted to open up and stay with the virus.
This has had an impression on China’s demand for crude.
Though China’s crude oil imports grew almost 7% in April from the identical month a yr earlier, this was its first rise in three months, and imports for the January-April interval as a complete fell 4.8% versus the identical interval final yr.
Saudi Arabia, the world’s prime oil exporter, lowered crude costs for Asia and Europe for June on Sunday, a sign of anticipated weaker demand.
“Lockdowns in China have weighed on home gasoline demand and that is more likely to weigh on refinery runs, which in flip would scale back demand for crude oil,” analysts at ING mentioned in a word.
Additionally weighing on the oil market Monday has been the strengthening of the U.S. greenback, with the dollar hitting a recent two-decade excessive, making oil dearer for holders of different currencies.
That mentioned, crude costs stay elevated, with each the benchmark contracts having gained over 40% thus far this yr.
Russia’s invasion of Ukraine has added to the final tightness of the market as international locations search alternate suppliers whereas the Group of the Petroleum Exporting International locations takes a gradual and regular stance in returning provide to the worldwide market after the cuts instigated through the pandemic.
The European Union is closing in on agreeing on a sixth bundle of sanctions towards Russia, a German international ministry spokesperson mentioned on Monday, after the European Fee proposed a phased embargo on Russian oil late final week.
Such an embargo requires a unanimous vote amongst EU members, and there was push again from among the international locations most depending on Russian power, like landlocked Hungary, Slovakia, and the Czech Republic.
“The EU had revised the proposal for the ban with a purpose to make it extra manageable for these international locations which might be closely reliant on Russian oil,” mentioned ING. “Hungary and Slovakia underneath the most recent proposal would have till the tip of 2024 to wean themselves off Russian oil, while the Czech Republic would have till June 2024. Nevertheless, this seems to haven’t been sufficient for Hungary, which continues to dam the deliberate ban.”
Over the weekend, the Group of Seven main industrialized nations agreed to an analogous ban on imports of Russian oil.