Oil falls to lowest level since 2021 as market unsettled in China

(Bloomberg) – Oil prices fell to their lowest level since December as unrest in China dented investors’ risk appetite and energy demand outlook, adding to tensions. on the already fragile global crude oil market.

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West Texas Middle fell below $75 a barrel after three weeks of losses. The dollar rose on safe-haven demand after protests against harsh virus restrictions spread across the country’s biggest crude oil importer over the weekend. Large crowds have gathered in Shanghai and protests have been reported in Beijing.

Falling oil prices are the latest twist in a tumultuous 12 months, with volatility driven by the war in Ukraine, aggressive central bank tightening to combat inflation, and China’s relentless efforts to eliminate Covid. -19. In recent days, European Union diplomats have also been entangled in talks about limiting the price of Russian crude, with talks to resume later on Monday.

Warren Patterson, head of commodity strategy at ING Groep NV in Singapore, said: “Sentiment in the oil market remains negative and the developments over the weekend in China are certainly not going to help. get what. “Attention seems to be entirely focused on the demand story.”

In addition to China, traders are also assessing the US move to grant Chevron Corp. permits to resume oil production in Venezuela after sanctions halted all drilling nearly three years ago. The lifting of sanctions comes after Norwegian mediators announced the resumption of political talks between President Nicolas Maduro and the opposition this weekend.

Key market metrics are signaling weaker conditions. WTI’s quick spread – the gap between the two nearest contracts – is 16 cents a barrel in a bearish put-off versus $1.29 a barrel in a reverse trend a month ago.

Since the outbreak of the pandemic, China’s approach to dealing with Covid-19 has been based on mass testing and widespread lockdowns to contain outbreaks, along with vaccinations. That hurts energy demand and fuels a build-up of resentment about the restrictions as other countries reopen. Despite the rules, virus cases rose to record levels this month.

In Europe, EU members have not yet been able to create a consensus on a G7 price ceiling for Russian oil. While Poland and the Baltic states oppose the proposed limit of $65 per barrel, saying it is too generous for Moscow, shipping nations like Greece favor a higher level. Russia said it would ban the sale of oil to anyone participating.

U.S. dollar gains often make currency-denominated goods more expensive for importers. As traders watched developments in China, the Bloomberg gauge of the greenback rose as much as 0.5%.

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