Brent ended down 4.06% at $102.32, following a brief foray below $100, and WTI ended down 3.45% at $98.54.
Oil prices lost a little footing on Monday on fears that a possible massive containment in China, to deal with the resurgence of COVID-19 in Shanghai and Beijing, might depress energy demand.
The idea that confinements might prevent travel but also limit industrial activity caused the barrel of Brent to lose 4.06%, for delivery in June, which concluded at 102.32 dollars.
During the session, the barrel of oil from the North Sea even briefly fell below the 100 dollar mark at 99.66 dollars (-6.55%) for the first time in two weeks.
The barrel of West Texas Intermediate (WTI) for delivery the same month, American benchmark, fell 3.45% to 98.54 dollars. It also fell in session to the threshold of 95 dollars (-6.50%), close to its lowest since the start of the war in Ukraine.
“We have the Covid which extends to Beijing and with that, the concern that a general confinement will be imposed” in the Chinese capital, indicated Bob Yawger of Mizuho USA.
The specialist specifies that Chinese demand for crude is already down 1.2 million barrels per day due to the severe health restrictions put in place in Shanghai.
“That number might grow. There are tons of reasons to think so, because the situation in Shanghai does not seem to be improving quickly,” commented the analyst.
Chinese demand for certain types of fuel (gasoline, diesel and kerosene for aviation) has also already fallen by 20% in April 2022 compared to a year earlier, reports the Bloomberg agency, citing sources at the Ministry of Health. ‘Chinese energy.
China is the biggest importer of crude oil.
Since the beginning of April, almost all of Shanghai’s 25 million inhabitants have been confined.
And Beijing has been living under the threat of confinement since Monday following a rare epidemic outbreak in the capital, while massive screenings are carried out in the middle of the street and supermarkets are stormed.
Another factor weighed down crude prices: the rise of the dollar.
Against the euro, the greenback is at its highest for 25 months.
“The strong dollar is not helping oil prices and that shouldn’t help as the Fed prepares to probably raise interest rates by 50 basis points next May 4,” said Bob Yawger. .
The U.S. central bank is expected to raise rates by this magnitude at least four times in a row, investors believe, helping the dollar, becoming more remunerative.
In Libya, production has resumed at sites that had been disrupted by blockages, the energy minister told financial agencies.
“That said, oil prices are unlikely to fall much further as Russian production continues to decline,” said Carsten Fritsch, an analyst at Commerzbank.
Barrel prices remain up over six months by more than 16% for Brent and more than 14% for WTI, while aluminum has gained more than 7%.