Crude Oil Slumped Sharply as Demands Outlook Weighs on Record COVID-19 Infections in China

Crude oil pushed lower during the start of the week on concerns that increasing COVID-19 infections in China to weigh on global demand for oil.

The U.S. West Texas Intermediate futures dropped by 2.87% to $99.14 while the Brent inched down by 2.84% to $103 a barrel.

Shanghai reported record daily deaths over the weekend with authorities in Beijing warned virus could silently spread quickly.

The development put more pressure on oil’s volatility as the market is already struggling with the war in Russia.

China is maintaining COVID Zero strategy and has impelled lockdowns in number of cities. Residents in a Beijing district were told to submit to three days of virus testing starting Monday in a bid to snuff out a rash of cases in the area. Shanghai is entering its fourth week of strict lockdown.
According to Bloomberg citing people familiar with the matter sad, the national’s demand for gasoline, diesel and aviation fuel is expected to slide by 20% from a year earlier. That’s equivalent to a drop in crude oil consumption of 1.2 million barrels a day, they said.

“Demand worries are back in focus,” said Vandana Hari, founder of Vanda Insights in Singapore, citing China’s virus lockdowns and easing global economic growth. “Risk is skewed to the downside.”