Oil prices drop to lowest since 2021 on China’s Covid-19 unrest
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Oil’s fall is the latest twist in what has been a tumultuous year.
PHOTO: REUTERS
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SINGAPORE – Oil dropped to the lowest level since December as unrest in China hurt risk appetite and the outlook for demand, adding to stresses in an already-fragile global crude market.
Brent crude dropped US$1.01, or 1.2 per cent, to trade at US$82.62 a barrel at 9.10am Singapore time. US West Texas Intermediate (WTI) crude slid US$1.09, or 1.4 per cent, to US$75.19.
Both benchmarks, which hit 10-month lows last week, have posted three consecutive weekly declines. Brent ended the latest week down 4.6 per cent, while WTI fell 4.7 per cent.
The United States dollar rose on demand for safe havens as protests over harsh anti-virus curbs spread across China, the world’s largest crude importer.
“Sentiment in the oil market remains negative, and developments over the weekend in China will certainly not help,” said Mr Warren Patterson, head of commodities strategy at ING Groep in Singapore. “Attention seems fully focused on the demand story.”
China has stuck with President Xi Jinping’s zero-Covid-19 policy even as much of the world has lifted most restrictions.
Hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over China’s strict Covid-19 restrictions
The wave of civil disobedience is unprecedented in mainland China since Mr Xi assumed power a decade ago, as frustration mounts over his zero-Covid-19 policy nearly three years into the pandemic.
Meanwhile, Group of Seven and European Union diplomats have been discussing a price cap on Russian oil of between US$65 and US$70 a barrel, with the aim of limiting revenue to fund Moscow’s military offensive in Ukraine without disrupting global oil markets.
But a meeting of EU government representatives, scheduled for Nov 25 evening to discuss the issue, was cancelled, EU diplomats said. The price cap is due to come into effect on Dec 5 when an EU ban on Russian crude kicks off.
Investors are also focusing on the next meeting of the Organisation of Petroleum Exporting Countries and its allies, known as Opec+, on Dec 4.
In October, Opec+ agreed to reduce its output target by two million barrels a day. BLOOMBERG, REUTERS
