Oil prices hit lowest level in close to two weeks
Oil prices begin the week at their lowest level in close to two weeks amid growing concerns about the current spread of coronavirus in China.
In addition, a potentially significant interest hike in the US is expected to hit the market, which will further hamper economic growth, writes Reuters.
A barrel of European benchmark crude Brent costs USD 103.61 Monday morning against USD 106.18 Friday afternoon. Meanwhile, US counterpart West Texas Intermediate trades concurrently at USD 99.11 per barrel against USD 101.81 Friday afternoon.
The Chinese city of Shanghai is entering its fourth week of tough lockdown measures, reporting a record number of Covid-19-related deaths over the weekend.
The news intensifies an already volatile oil market, which has been heavily affected by the war in Ukraine.
According to Bloomberg News, China, which is the world’s largest oil importer, is headed for the worst demand shock since the outbreak of the pandemic in 2020.
”Oil is rerating lower due to the China consumption hit while the Federal Reserve is raising interest rates to slow down the US economy,” notes Stephen Innes, managing partner at SPI Asset Management, to Reuters.
”Those are two gusty headwinds suggesting some oil bulls will give way to recession fears and demand devastation.”
Chair of the Federal Reserve Jerome Powell has indicated a half-percentage point interest rate hike when the Fed’s board convenes in May.
On top of this, the market is expected to receive additional oil supplies, stoking speculation of a continued downward trend.
According to Bloomberg News, Libya will resume its oil production from closed oil fields within the next few days, while the Caspian Pipeline Consortium oil terminal has resumed regular operations after repairs to a damaged mooring point.
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