TOKYO: Oil futures fell more than a dollar early Monday after protests in China, the biggest oil importer, over harsh COVID-19 restrictions fueled demand worries, while investors are remained wary of an agreement to cap the West. oil prices and an OPEC+ meeting.
Brent crude oil was down $1.01, or 1.2%, to $82.62 a barrel at 0110 GMT. US West Texas Intermediate crude oil fell $1.09, or 1.4%, to $75.19.
Both benchmarks, which hit 10-month lows last week, recorded three consecutive weekly declines. Brent finished last week down 4.6%, while West Texas Intermediate crude fell 4.7%.
“In addition to growing concerns over weak fuel demand in China due to a surge in COVID-19 infections, political uncertainty resulting from rare protests against tight government COVID-19 restrictions in Shanghai has sparked a fire sell-off,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
He added that the trading range of WTI is expected to fall between $70 and $75. He said that the market could remain volatile depending on the outcome of the OPEC+ meeting and the Russian oil price cap.
China, the world’s largest importer of oil, has joined President Xi Jinping’s zero-COVID policy even as much of the world has lifted most restrictions.
Hundreds of protesters and police clashed in Shanghai on Sunday evening, after protests against China’s strict coronavirus restrictions erupted for a third day and spread to several cities following a fire that killed people in the far west of the country.
Mainland China has not seen such a wave of civil disobedience since Xi came to power a decade ago, with frustration growing over his zero-COVID policy after the pandemic erupted nearly three years ago.
At the same time, G7 and European Union diplomats discussed limiting the price of Russian oil to between $65 and $70 a barrel with the aim of limiting revenues to finance Moscow’s military offensive in Ukraine without disrupting the global oil markets.
But EU diplomats said a meeting of EU government representatives scheduled for the evening of Nov. 25 to discuss the matter had been cancelled. The Russian oil price cap will take effect on December 5, when the European Union’s embargo on Russian crude begins.
Investors are also focusing on the upcoming meeting of OPEC+, which includes the Organization of the Petroleum Exporting Countries and its allies, on December 4th.
OPEC+ had agreed in October to cut the target level of its production by two million barrels a day through 2023.
(Reuters)
