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Oil Down as Stringent COVID-19 Curbs in China Might Dent Demand

Commodities Jun 12, 2022 11:46PM ET
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© Reuters.

By Zhang Mengying

Investing.com – Oil was down on Monday morning in Asia as investors are concerned that the resumption of stringent COVID-19 curbs such as partial lockdowns in Shanghai may hurt fuel demand.

Brent oil futures fell 1.37% to $120.34 by 11:38 PM ET (3:38 AM GMT) and crude oil WTI futures fell 1.41% to $118.97. Both benchmarks rose more than 1% last week over robust demand in the U.S. and a potential rebound in China after lockdown measures were lifted from June 1.

But a flare-up of COVID-19 cases in Beijing has led to the city's most populous district of Chaoyang announcing on Sunday three rounds of mass testing, adding to worries about the uncertain outlook for oil demand.

The sharp rise in U.S. inflation data and concerns of an intensified monetary tightening are also weighing on the market, the U.S. consumer price index released Friday rose 8.6% in May year-on-year, a fresh 40-year high.

“The stronger greenback and stagflation fears proved to be the bullish market’s undoing,” Stephen Innes of SPI Asset Management said in a note.

"China remains the significant near-term downside risk, but most view the gradual normalization of Chinese demand as a powerful positive for oil despite the potential for lockdown noise in the coming weeks as current demand is far from reflecting normal conditions."

Saudi Arabia, the world’s top exporter, planned to divert some crude to Europe from China in July to boost supplies in the West, according to Reuters.

Oil Down as Stringent COVID-19 Curbs in China Might Dent Demand
 

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Comments (2)
Leo Mu
Leo Mu Jun 13, 2022 2:19AM ET
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Gas hit record high $5/gallon at the pump yesterday, there’s no reason for oil to start downtrend. It’s just a pullback.
Andrew Ulferts
Andrew Ulferts Jun 13, 2022 12:26AM ET
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If history repeats itsself, as I’ve posted this reply to articles here many times on Sunday nights, WTI will be green by market open (9:00 ET.) I’m like 9-0 on this. We know it’s quad witching this week, markets are going to be down and y’all have some very powerful influence guiding these stories….. Short attack. I’ll hold. I always hold.
Andrew Ulferts
Andrew Ulferts Jun 13, 2022 12:26AM ET
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They can have my shares when I’m done with them.
Andrew Ulferts
Andrew Ulferts Jun 13, 2022 12:26AM ET
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Can we revist this morning’s post and my reply? Hahaha. Every. Single. Monday.
 
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