A worker holds a nozzle to pump gasoline into a vehicle at a gas station in Mumbai, India May 21, 2018. REUTERS/Francis Mascarenhas
- Shanghai goes into lockdown as COVID-19 cases surge
- OPEC+ meets on Thursday
- Further emergency releases expected from reserves
MELBOURNE/TOKYO, March 28 – Oil prices plummeted about $4 on Monday as concerns mounted over slowing fuel demand in China after authorities in Shanghai said they would protect the country’s financial center for a COVID-19 outbreak. Close 19 test flash over nine days.
The market began another week of uncertainty, rattled on the one hand by the ongoing war between Ukraine and Russia, the world’s second largest crude oil exporter, and the extension of COVID-related lockdowns in China, the world’s largest crude oil importer. Continue reading
Brent crude futures fell as low as $116.00 a barrel to trade up $3.88 or 3.2% at $116.77 by 0131 GMT.
U.S. West Texas Intermediate (WTI) crude oil futures hit a low of $109.30 a barrel and fell $3.92, or 3.4%, to $109.98.
Both benchmark contracts rose 1.4% on Friday and posted their first weekly gains in three weeks, with Brent up more than 11.5% and WTI up 8.8%.
“Shanghai’s lockdown prompted another sell-off from disappointed investors as they expected such a lockdown would be avoided,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.
He added the market has factored in the impact of a rocket attack on a Saudi oil distribution facility last Friday.
“However, with OPEC+ less likely to increase oil production faster than it has been in recent months, we expect the oil market to turn bullish again later this week,” he said.
Shanghai’s municipal government said Sunday all firms and factories would halt production or let people work remotely in a two-tier nine-day lockdown after the city reported a new daily record for asymptomatic COVID-19 infections. Continue reading
To further reduce fuel demand, public transport, including ride-hailing services, will also be suspended during the lockdown.
On Friday, Yemeni Houthis said they had launched attacks on Saudi energy facilities, and the Saudi-led coalition said Aramco’s petroleum products distribution station in Jeddah was hit, causing a fire in two storage tanks but no casualties. Continue reading
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, will meet on Thursday.
OPEC+ has so far resisted calls from major consumer nations, including the United States, to ramp up output. The group has increased production by 400,000 barrels per day (bpd) every month since August to offset cuts made as the COVID-19 pandemic hit demand.
To ease tight supply, the United States is considering another release of oil from the Strategic Petroleum Reserve, which could be larger than the 30 million barrel sale earlier this month, a source said.
“However, additional releases may raise fears of a shortage of already lower stock levels, which will limit further releases in the future,” said Fujitomi’s Saito.
Global inventories are at their lowest since 2014.
Edited by Cynthia Osterman and Jacqueline Wong