Home MarketsCommodities Oil prices sink as China’s tightening anti-Covid curbs hurt demand outlook

Oil prices sink as China’s tightening anti-Covid curbs hurt demand outlook

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Crude oil fell again after its biggest weekly drop since August as China tightened its coronavirus containment measures and the demand outlook worsened.

The global benchmark, Brent, has fallen towards $87 a barrel after dropping almost 9% last week. The country saw its first Covid-related death in nearly six months on Saturday, with two more reported on Sunday, the world’s largest, just as the 11 million-person city near the capital called on its residents. It has sparked fears of a further wave of restrictions in oil-importing countries.Stay home during the outbreak.

Goldman Sachs Group Inc. cut its fourth-quarter forecast for Brent crude by $10 to $100 a barrel, according to the note.

Crude oil wiped out gains made early in the quarter when the Organization of the Petroleum Exporting Countries and its allies, including Russia, agreed to cut production by 2 million barrels per day. The European Union’s impending ban on Russian maritime transport and her G7 price cap plans cloud the outlook, with officials likely to announce cap levels on Wednesday, stepping up response to Moscow’s invasion of Ukraine is doing.

Goldman’s analysts, including Callum Bruce, said Pricecap’s “significant cases of COVID-19 in China and lack of clarity on implementation make it natural for markets to worry about futures fundamentals. ‘ said. Still, for long-term investors, the decline offers an opportunity to add length, they said.

Weakness in the market is reflected in the rapid softening of inequality. Brent’s immediate spread (the gap between his two most recent contract months) was backdated to 42 cents a barrel from over $2 a barrel a month ago. The same gauge at the West Texas Intermediate flipped to Contango. This is a bearish signal of ample supply in the near term.

Commodity investors are also concerned that further aggressive monetary tightening could lead to a slowdown in the global economy, hurting energy consumption. Traders this week should refer to the latest Federal Reserve Board minutes for more clues about the rate hike process.

James Whistler, Managing Director of Vanir Global Markets Pte. “Oil markets cannot shake the bears.”

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