Oil falls 1.56 dollars on concerns about Chinese demand


Oil fell around 1.5% on Tuesday as concerns over demand prospects due to prolonged Covid-19 lockdowns in China offset support for a potential European oil embargo on Russia over its actions in Ukraine.

Beijing, which is reporting dozens of new cases daily, is conducting mass testing of residents to avoid a lockdown similar to the one in Shanghai over the past month. Restaurants in the capital were closed for dining and some apartment blocks were sealed off.

At 11:17 GMT, crude Brent fell $1.54, or 1.43%, to $106.04 a barrel, while the West Texas Intermediate in the United States (WTI) it lost 1.56 dollars, or 1.47%, to settle at 103.63 dollars.

The positive driver has been the EU embargo and whether it will be announced,” said Vivek Dhar, a commodities analyst at Commonwealth Bank. “Its negative driver is the Chinese Covid-19 lockdowns. Both are very important issues.”

Oil has hit multi-year highs this year, with Brent hitting $139 in March, its highest since 2008, after the invasion of Ukraine by Moscow exacerbated supply concerns that were already fueling a rally.

The growing prospect of new European Union sanctions on Russia has lent support. The European Commission is expected to finalize work on the bloc’s next sanctions package on Tuesday, which would include a ban on buying Russian oil.

The latest round of US inventory and supply reports will also be a focus. Five analysts polled by Reuters forecast, on average, a 1.2 million barrel draw in oil inventories in the week to April 29.

industry group American Petroleum Institute (API) will publish its inventory report at 20:30 GMT, followed by government figures from the Energy Information Administration (EIA) on Wednesday.



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