On Monday, oil prices registered losses as fears over weaker fuel demand in China grew on Shanghai lockdown efforts.
Brent crude futures skidded 3.69% or 4.44 points to $112.85 per barrel. Then, US West Texas Intermediate oil contracts declined 4.42% or 5.04 points to $108.77 per barrel.
Both of the benchmarks reversed their 1.40% gain last Friday. They notched their first weekly gains in three weeks, with Brent surging 11.80% and WTI climbing 8.80%.
Accordingly, the Chinese financial hub, Shanghai, has entered a two-stage lockdown of 26.00 million people today.
This stricter health protocol is an attempt to curb the further spread of the coronavirus.
In line with this, all firms and factories in the region would suspend operations over nine days. In addition, the new directives would halt public transport, including ride-hailing services.
Analysts explained that the move hints that the strict zero-Covid policy could lead to repeated lockdowns in key business centers.
Remarkably, China is the largest crude importer worldwide. Experts expected the country’s oil demand to be 800,000 barrels per day lower in April than normal levels.
Then, US crude exports have significantly increased to 3.80 million barrels per day for the March 18 week. This figure is the highest since July 2021.
Accordingly, stockpiles in Cushing, Oklahoma, are currently at 25.20 million barrels, near a four-year low reached in early March.
Likewise, short storage levels are also an issue in Canada, the world’s fourth-largest producer of crude.
The inventory in the western area remained within 3.00 million barrels of the record-low utilization set in 2017.
Eventually, the hopes for reconciliation from diplomatic talks between Russia and Ukraine also weighed on oil prices.
OiOil market to turn bullish on OPEC+ decision
Analysts expected the oil market to turn bullish on the awaited decision of the Organization of the Petroleum Exporting Countries and allies (OPEC+).
On Thursday, the group will discuss future output levels. Analysts widely expected the cartel to be less aggressive with their production hikes.
OPEC+ has resisted calls from producers, including the US, to boost output further. It is unlikely to do so this time as Russia is a member of the organization.
At the same time, supply deficits continue to loom. Subsequently, April spot volumes of Moscow crude would struggle to find buyers.
In the stated case, experts expected that 2.50 million barrels of Russian oil products would skid in April.
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