Oil prices dipped more than US$1 per barrel on Monday after Chinese officials reaffirmed their commitment to a strict Covid-19 policy over the weekend, as infections reached a six-month high, fading hopes for an oil demand rebound in the world’s largest crude importer.
Brent crude futures dropped US$0.88, or 0.89%, to US$97.69 a barrel by 11.36 A.M. (Thai time), after hitting as low as US$96.50 earlier. US West Texas Intermediate crude was at US$91.50 a barrel, down US$1.11, or 1.20%.
Last week, Brent and WTI climbed 2.9% and 5.4%, respectively, on rumors of a possible end to harsh Covid-19 lockdowns, sending China’s stock markets and commodity prices higher despite the lack of any declared changes.
However, at a press briefing on Saturday, Chinese health officials stated that they will continue to apply a “dynamic-clearing” approach to Covid-19 cases as they arise.
There’s disappointment “after confirmation that China will stick to its Zero-Covid policy,” said Warren Patterson, head of commodities strategy at ING Groep NV. “We could see some further downward pressure driven by the broader macro picture. However, in the medium-to-longer term, the outlook is still constructive with the market expected to tighten up over 2023.”