Tuesday saw a drop in oil prices as China reimposed Covid-19 restrictions, including business closures and lockdowns, in bid to rein in new infections, coupled with concerns about a global economic slowdown dampened expectations for fuel demand.
U.S. West Texas Intermediate crude for August delivery was at US$102.47 a barrel, down US$1.62, or 1.5%, as of 11.11 a.m. local time in Thailand, while Brent crude futures for September slid US$1.50, or 1.4%, to US$105.60 per barrel.
Many cities in China have reportedly adopted new Covid-19 curbs to combat fresh outbreaks, with the key financial hub of Shanghai preparing for another mass Covid testing after detecting the BA.5 omicron subvariant.
According to Reuters, analysts from the consultancy Eurasia Group stated that “growing fears of a recession and continued sluggish demand in China are pulling oil prices lower, though the current supply-demand balances remain precarious.”
In addition, there have been other cuts of energy supply routes from Russia to Europe, raising concerns among traders and utilities.