Oil prices rebound after eased Covid-19 restrictions in Shanghai
News of slightly eased Covid-19 restrictions in China’s biggest city, Shanghai, contribute to a small rebound in oil prices Tuesday morning following Monday’s steep decline, writes Bloomberg News.
The tough restrictions imposed in China have in recent days put pressure on oil prices, due to which the news of eased restrictions has therefore been received positively in the market.
A barrel of European benchmark crude Brent costs USD 100.71 against USD 98.49 Monday, an increase of 2.3 percent after a 4.2-percent drop Monday. The price of US counterpart West Texas Intermediate trades at USD 96.50 per barrel against USD 94.29 Monday afternoon, an increase of 2.3 percent against a decline of 4 percent Monday.
About a month ago, the oil prices averaged USD 120 per barrel, but all the gains have almost shrunk to levels seen before Russia’s invasion of Ukraine.
”What we’re seeing now is looking like a short-lived rally. Investors are still concerned about the negative impact the virus flare-up will have on the nation’s growth and demand,” says commodities analyst at Seoul-based IV Investment Corp Will Sungchil Yun to Bloomberg news.
The eased restrictions only apply to a few residential areas in Shanghai, and the authorities have indicated that a full lockdown could be reinstated in the event of a rising infection rate.
It has, to put it mildly, been a tumultuous period for oil prices since the end of February, which saw the invasion of Ukraine, rising tensions in the Middle East, Covid-19 outbreaks in China and a tightened monetary policy in the US.
The invasion of Ukraine – and the subsequent prices surges – led the US and allies to release strategic oil reserves to bring rising energy prices under control.
Meanwhile, top diplomats with the Organization of Petroleum Exporting Countries have told the EU that the global oil crisis spurred by Russia’s invasion has been beyond OPEC’s control.
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