Crude oil prices slip as China's COVID curbs; Brent crude drops 78 cents
Last week, the prices were changed as gains from a nominal supply cut by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, were offset by ongoing lockdowns in China.
FollowOil prices on Monday slipped during the Asian trade as the prospect of further interest rate hikes in the United States and Europe to quell inflation and the strict imposition of COVID-19 restrictions in China overshadowed the global demand outlook.
According to reports, Brent crude has dropped 78 cents, or 0.9%, to $86.01 a barrel by 0040 GMT, after settling 4.1% higher on Friday. US West Texas Intermediate crude was at $92.11 a barrel, down 73 cents, or 0.8%, after a 3.9% gain in the previous session.
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Last week, the prices were changed as gains from a nominal supply cut by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, were offset by ongoing lockdowns in China.
For the first time in two decades, China's oil demand could contract this year as Beijing's zero-COVID policy keeps people at home during holidays and reduces fuel consumption.
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In a note, Commonwealth Bank of Australia analyst Vivek Dhar wrote, "Demand concerns centred on the impact of rising interest rates to combat inflation and China's COVID-zero policy."
The European Central Bank and the Federal Reserve are prepared to increase interest rates further to tackle inflation, which could lift the value of US dollar against currencies and make dollar-denominated oil more expensive for investors.
Still, global oil prices may rebound towards the end of the year - supply is expected to tighten further when a European Union embargo on Russian oil take effect on December 5.
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Meanwhile, the G7 will implement a price cap on Russian oil to limit Moscow's lucrative oil export revenue following its invasion of Ukraine this year in February. It also plans to take measures to ensure that the oil could still flow to emerging nations.
Moscow calls the Ukraine invasion "a special military operation".
