Oil prices slid on Monday, falling close to their lowest level this year, as street protests against strict Covid19 curbs in China, the world’s biggest crude importer, stoked concern over the outlook for fuel demand.
Brent crude dropped by$1.32, or 1.6 per cent, to trade at$82.31 a barrel at 10:48 am ET(1548 GMT), having slumped more than 3 per cent to $80.61earlier in the session for its lowest since January 4.
US West Texas Intermediate (WTI) crude slid 75 cents, or 1 per cent, to $75.53 after touching its lowest since December 22 last year at $73.60.
Both benchmarks, which hit 10-month lows last week, have posted three consecutive weekly declines.
Phil Flynn, an analyst at Price Futures Group in Chicago, said oil was paring losses as investors looked ahead to an Opec+ meeting this weekend.
“We feel some of the selling based on reports of Chinauprisings was overdone,” Flynn said. “Inventories are still near record lows and this probably increases the odds of an Opec production cut.”
China has stuck with President Xi Jinping’s zero-Covidpolicy even as much of the world has lifted most restrictions. Hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over the restrictions flared for a third day and spread to several cities.
The Organisation of the Petroleum Exporting Countries and allies, including Russia, a group known as Opec+, will meet on December 4. In October, Opec+ agreed to reduce its output target by 2 million barrels per day through 2023.
Meanwhile, the Group of Seven (G7) and European Union diplomats have been discussing a price cap on Russian oil of between $65 and $70 a barrel, with the aim of limiting revenue to fund Moscow’smilitary offensive in Ukraine without disrupting global oil markets. However, EU governments were split on the level at which to cap Russian oil prices, with the impact being potentially muted.
“Talks will continue on a price cap but it seems it won’t be as strict as first thought, to the point that it may be borderline pointless,” said CraigErlam, senior markets analyst at OANDA.
