Oil futures fell more than $1 early on Monday as protests in top importer China over strict COVID-19 restrictions fueled concerns about demand, while investors remained cautious ahead of Russia’s oil price ceiling deal and an OPEC meeting.
Brent crude fell. It was up $1.01, or 1.2 percent, at $82.62 a barrel by 1100 GMT. U.S. West Texas Intermediate (WTI) crude fell $1.09, or 1.4 percent, to $75.19.
Both benchmarks, which hit 10-month lows last week, have posted three consecutive weekly declines. Brent fell 4.6 percent last week, while WTI fell 4.7 percent.
“In addition to growing concerns about weakening fuel demand due to China’s surge in COVID-19 cases, political uncertainty in Shanghai, sparked by rare protests against the government’s strict COVID restrictions, also led to the sell-off,” Hiroyuki said. Kikukawa, head of research at Nissan Securities.
He said the WTI trading range is expected to fall to $70–$75, adding that the market could remain volatile depending on the outcome of the OPEC meeting and Russia’s oil price ceiling.
China, the world’s largest oil importer, has joined President Xi Jinping’s “zero-covid” policy even as much of the world has lifted most restrictions.
Hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests against China’s strict COVID restrictions flared into the third day and spread to several cities in the country’s far west after a deadly fire.
The wave of civil disobedience in mainland China is unprecedented since Xi came to power a decade ago, as frustration over his “zero COVID-19” policy has grown during the nearly three-year pandemic.
Meanwhile, Group of Seven (G7) and European Union diplomats discussed a Russian oil price ceiling of $65–$70 per barrel, with the aim of limiting revenues to finance Moscow’s military offensive in Ukraine without disrupting global oil markets.
However, a meeting of EU government representatives scheduled for the evening of November 25 to discuss the issue has been canceled, EU diplomats said. The price cap should take effect on December 5, when the EU ban on Russian oil begins.
Investors are also focused on the next meeting of the Organization of the Petroleum Exporting Countries and Allies (OPEC), which will take place in December.
In October, OPEC agreed to reduce its production target by 2 million barrels a day until 2023.
Hundreds of protesters and police clashed in Shanghai on Sunday night, as protests against China’s strict COVID restrictions grew for the third day and spread to several cities after a fire killed people in the west of the country.
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