Brent crude futures dropped $1.20.
SINGAPORE – On Monday, oil prices dropped more than $1 per barrel after Chinese officials said again over the weekend that they were committed to strict COVID containment. This killed hopes that oil demand in the world’s biggest crude importer, China, would rise again.
By 02:27 GMT, Brent crude futures had gone down $1.20, or 1.2%, to $97.37 a barrel. Earlier, they had gone as low as $96.50. The price of a barrel of U.S. West Texas Intermediate crude was $91.24, which was down $1.37, or 1.5%. Earlier in the session, a barrel cost $90.40, which was the session low.
“Oil prices fell sharply after Chinese officials said they would stick to the COVID-zero policy, even as the number of infected people in China rose.” “This could lead to more restrictions, which would hurt demand,” said Tina Teng, an analyst at CMC Markets.
She also said that the rise of the U.S. dollar is making oil prices go down.
Even though the jobs report was good, four Federal Reserve policymakers said Friday that they would still consider a smaller interest rate hike at their next meeting.
Brent and WTI went up by 2.9% and 5.4%, respectively, last week. This was because rumours of a possible end to strict COVID-19 lockdowns sent China’s stock markets and commodity prices up, even though no changes had been announced.
But at a news conference on Saturday, health officials said they will keep using “dynamic clearing” to deal with COVID cases as soon as they show up.
Later on Monday, trade data from the world’s second-largest economy could show that exports have cooled even more as global demand continues to fall.
“The market is still seeing signs of weakness in oil demand from already high prices and weak economic conditions in developed markets,” ANZ analysts wrote in a note, adding that demand in Europe and the United States has dropped back to 2019 levels.
“We now expect global demand in Q4 2022 to grow by only 0.6 mb/d (millions of barrels per day) from the same quarter last year and to slow down next year.”
Oil prices are going up because people think there will be less oil available after the European Union puts a ban on Russia’s exports of crude oil by sea on December 5. At the same time, refineries around the world are ramping up production to meet the strong demand for diesel.
This quarter, U.S. oil refiners will run their plants at near or above 90% of capacity, while China’s largest private refiner, Zhejiang Petroleum and Chemical Co. (ZPC), is increasing diesel production.
Kuwait Integrated Petroleum Industries Co. (KIPIC) said on Sunday, according to a state news agency, that the first phase of the Al-Zour refinery is now open for business (KUNA).
