Oil prices fell on Monday amid the global fuel demand outlook overshadowed by COVID-19 restrictions in China and the potential for further rate hikes in the US and Europe.
Brent crude futures were down $1.01, or 1.1%, to $91.83 a barrel as of 0630 GMT, after gaining 4.1% on Friday. West Texas Intermediate (WTI) crude fell $1.13, or 1.3%, to $85.66, after gaining 3.9% in the previous session.
Prices were little changed last week as the gains from the nominal supply cut by the group, known as OPEC+, from its allies, including Russia, were offset by continued lockdowns in China, the world’s largest importer of crude oil.
China’s oil demand could contract for the first time in two decades this year as Beijing’s zero-COVID policy keeps people at home on holiday times and cuts fuel consumption.
Meanwhile, the European Central Bank and the Federal Reserve are poised to raise interest rates further to combat inflation, which could boost the value of the US dollar against currencies and make dollar-denominated oil more expensive for investors.
The market focused on demand concerns, the impact of rising interest rates to fight inflation, and China’s COVID-zero policy.
Still, global oil prices may recover towards the end of the year, despite $85 for Brent starting to be mentioned. Because supply is expected to tighten further when the European Union’s embargo on Russian oil comes into effect on December 5.
The G7 plans to impose a price ceiling on Russian oil to limit Russia’s profitable oil export revenue after its invasion of Ukraine in February, and to take measures to keep oil flowing to developing countries.
