Oil prices fell more than US$1 a barrel on Monday after Chinese health officials on the weekend reiterated their commitment to a stringent COVID containment approach, dashing hopes of a rebound in oil demand from the world’s top crude importer.
Brent crude futures dropped US$1.24 or 1.26per cent to trade at US$97.33 a barrel, after falling as low as US$96.50 earlier in the day. U.S. West Texas Intermediate crude was at US$91.17 a barrel, down US$1.44 or 1.55per cent after hitting a session-low of US$90.40.
A jump in the U.S. dollar is also weighing on oil prices, she added.
Four Federal Reserve policymakers on Friday indicated they would still consider a smaller interest rate hike at their next policy meeting despite strong jobs data.
Brent and WTI rose last week, climbing 2.9per cent and 5.4per cent respectively on rumours of a possible end to stringent COVID-19 lockdowns despite the lack of any announced changes.
However, at a news conference on Saturday, health officials said they will persevere with their “dynamic-clearing” approach to COVID cases as soon as they emerge.
Meanwhile, China’s exports and imports unexpectedly contracted in October, the first simultaneous slump since May 2020, as a perfect storm of COVID curbs at home and global recession risks dented demand and further darkened the outlook for a struggling economy.
Although China’s crude oil imports rebounded to the highest level since May, volume for the first 10 months was still 2.7per cent below the same period a year earlier at 413.53 million tonnes or 9.93 million bpd.
Oil prices have been underpinned by expectations of tighter supplies as the European Union’s embargo on Russia’s seaborne crude exports will start on Dec. 5 even though refineries worldwide are ramping up output.