Oil extends retreat as China battles worsening Covid-19 outbreak
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The US oil benchmark tumbled after President Joe Biden announced a massive release of crude from strategic reserves.
PHOTO: EPA-EFE
SYDNEY (BLOOMBERG) - Oil prices fell on Monday (April 4) as traders tracked a worsening Covid-19 outbreak in China and prospects for additional crude releases from government stockpiles.
US West Texas Intermediate dropped below US$99 a barrel in early Asian trade after sinking 13 per cent last week.
China is grappling with a renewed coronavirus outbreak that is harming crude demand. Shanghai's 25 million residents are almost all under some form of lockdown as the country added more than 13,000 daily infections, with state media reporting a case infected with a new subtype.
The United States oil benchmark tumbled last week after the Biden administration announced a massive release of crude from strategic reserves to combat prices that have been buoyed by the war in Ukraine.
Japan and Britain will also tap stockpiles, while New Zealand may participate too. After the US move, Goldman Sachs Group pared price forecasts while remaining broadly bullish on oil's outlook.
Traders were also tracking stop-start talks to restore a 2015 nuclear accord with Iran after Teheran said that it is close to reaching an agreement with the US. If concluded, a pact may boost official Iranian crude exports.
Although prices have eased, leading players remain wary. Vitol Group, the biggest independent crude trader, warned at the weekend that prices had fallen to levels that did not reflect risks, including disruptions to Russian exports.
