Oil prices fell sharply on Monday amid growing concerns about demand prospects following a decision by Chinese authorities to lock Shanghai down to curb the outbreak of the coronavirus.
In particular, the crude for May delivery lost $ 7.94, or 7%, and closed at $ 105.96 a barrel on the New York Mercantile Exchange. This is the lowest level since March 18.
Brent crude for May delivery fell $ 8.17, or 6.8%, to $ 112.48 a barrel on the ICE Futures exchange.
Last week US crude gained 9%, while Brent almost 12%.
China has begun locking up most of its financial capital and the country’s largest city amid a spate of outbreaks. The lockdown will be implemented in two stages and is expected to take nine days for the authorities to conduct mass checks for Covid-19. This is the most extensive lockdown since the closure of Wuhan, the epicenter of the pandemic, in early 2020.
According to the Chinese authorities’ plan, the restrictions will start on the east side of the city and will remain in force until April 1, after which they will be applied on the west side for the period April 1-5. Public transport will be out of order, while companies and factories in the city of 25 million will have to shut down or telework.
Demand for oil in China, the world’s largest importer, is expected to be 800,000 barrels a day weaker than usual in April, said Bjarne Schieldrop, chief commodity analyst at SEB, according to Reuters.
Meanwhile, hopes for progress in peace talks between Ukraine and Russia, which are expected to begin tomorrow in Turkey, have also helped lower prices.
Source: Capital
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