Oil prices dropped on Monday amid worries that China’s expanding Covid-19 restrictions may reduce demand, countering indications that the biggest US shale field’s output is slowing down.
After falling 1.2 percent on Friday, the price of Brent crude futures decreased by 36 cents, or 0.4%, to $95.41 a barrel by 0151 GMT.
US West Texas Intermediate (WTI) crude was trading at $87.67 per barrel, down 23 cents (0.3%) from its Friday closing price.
Wider Covid restrictions in China always cause worries about demand from the top crude importing country in the world, according to Stephen Innes of SPI Asset Management.
As breakouts grew wider, Chinese localities strengthened their adherence to Beijing’s zero-Covid policy, dashed earlier expectations of a recovery in demand.
WTI is still supported, however, by warnings from significant US providers that the Permian Basin, the country’s top shale field, is slowing down in terms of efficiency and volume growth.
The warnings came as US oil shipments reached a new high last week, helping to drive up WTI prices by 3.4 percent in part. Brent increased by 2.4 percent last week, marking its second straight weekly gain.
Separately, according to People’s Bank of China Governor Yi Gang, the country’s central bank reiterated its current policy goals of maintaining a reasonable level of liquidity and boosting credit support for the real economy.
Despite growing usage of renewable energy and electric vehicles, the Organisation of the Petroleum Exporting Countries is anticipated to maintain its position that oil consumption will rise for another ten years in its upcoming outlook, according to two Opec sources.
Huge energy company earnings, like those of Exxon Mobil Corp. and Chevron Corp., have also rekindled calls for windfall taxes.