Oil falls 3% as China lockdown fuels demand concerns

An oil pump jack pumping oil in an oil field near Calgary, Alberta, Canada, July 21, 2014. REUTERS/Todd Korol

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  • China’s Shenzhen expands COVID-19 restrictions as cases rise
  • China August factory activity shrinks as orders weaken
  • Dollar index hits 20-year high
  • OPEC+ sees market tightening in 2022 and 2023

LONDON (Reuters) – Oil prices fell 3% on Thursday. China’s new coronavirus lockdown measures have heightened concerns that high inflation and rate hikes are weighing on fuel demand.

Brent crude futures fell $1.95 (3.2%) to $92.64 a barrel at 11:34 ET (1535 GMT). US West Texas Intermediate (WTI) Crude Oil futures fell $2.81, or 2.9%, to $86.84 a barrel.

Julius Baer analyst Norbert Rucker said: “Western world oil demand is stagnant, as is China’s, but supply is slowly increasing, largely on the back of the US shale boom.

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Factory activity in Asia plunged in August as China’s zero COVID containment and cost pressures continued to hit businesses, dimming prospects for the region’s fragile recovery, according to Thursday’s more

Shenzhen, a technology hub in southern China, has ramped up its COVID-19 containment as cases continue to rise. Large events and indoor entertainment were suspended for his three days in the city’s most populous district, Bao’ more

Major European stock indices fell to seven-week lows amid growing fears of aggressive rate hikes to combat record more

The dollar index hit a 20-year high after US data showed a resilient and strong economy, giving the Federal Reserve room to raise rates. A strong US dollar makes dollar-priced oil more expensive for holders of other currencies.

“China is again in lockdown due to the coronavirus at major export terminals,” said Dennis Kistler, senior vice president of trading at BOK Financial.

There is also a possible revival of the 2015 Iran nuclear deal, which has allowed OPEC members to boost oil exports, weighing on prices.

French President Emmanuel Macron said he hoped a deal could be reached in the next few more

Oil market volatility rose this year as OPEC struggled to boost production after Russia sent military forces to Ukraine.

OPEC output reached 29.6 million bpd in the most recent month, while U.S. production rose to 11.82 million bpd in June, according to a Reuters survey.

Both are at their highest levels since April more

Still, according to OPEC and its partner OPEC+, the oil market surplus is expected to be just 400,000 bpd in 2022, well below previous more

The group expects an oil market deficit of 300,000 bpd in 2023.

Meanwhile, U.S. crude oil inventories fell by 3.3 million barrels and gasoline inventories fell by 1.2 million barrels, according to the U.S. Energy Information Administration.

The G7 finance ministers will meet on Friday to discuss Washington’s proposed price ceiling for Russian oil, the White House more

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Additional reporting by Ahmad Gadar (London) and Yuka Obayashi (Tokyo). Edited by Jason Neely, Kirsten Donovan and David Gregorio

Our Standards: Thomson Reuters Trust Principles.


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