Oil prices fall by more than $2/bbl on fresh COVID-19 outbreak in China

SINGAPORE (ICIS)–Oil prices fell by more than $2/bbl on Monday on worries that fresh COVID-19 outbreaks in China could lead to further lockdowns, which will weigh on fuel demand.

02:05 GMT ($/bbl)	Contract	Low	High	Open	Last	Previous	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 Shanghai has re-imposed a dine-in ban, while Beijing has delayed re-opening for most schools planned for this week as COVID-19 infections rates in both cities ticked higher.

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

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

“The recent outbreak is strongly explosive in nature and widespread in scope,” Xu Hejian, spokesperson of the Beijing municipal government, had said in a news briefing.

Beijing’s most populous district, Chaoyang, on 12 June announced three rounds of mass testing between 13-16 June, but the city has not announced any fresh lockdowns.

In Shanghai, officials over the weekend announced three new confirmed local cases detected outside quarantined areas on 11 June, as all residents in 15 of its 16 districts underwent a fresh round of COVID-19 testing.

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

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

That compared with 275 new cases a day earlier.

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

The US consumer price index increased a larger-than-expected 8.6% last month, the largest year-on-year increase since December 1981, Labor Department figures showed on 10 June.

Both Brent and WTI had risen by more than 1% last week on data showing robust oil demand in the US – the world’s top consumer – despite inflation concerns, and on hopes that consumption in China could rebound after COVID-19 curbs were lifted from 1 June.

Focus article by Nurluqman Suratman

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

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