TOKYO: Oil futures fell more than $2 a barrel on Monday, with WTI hitting an 11-month low, as protests in top importer China over strict COVID-19 curbs fuelled demand concerns.
Brent crude dropped $2.16, or 2.6%, to trade at $81.47 a barrel at 0230 GMT, after diving to $81.16 earlier in the session — its lowest since Jan. 11.
U.S. West Texas Intermediate (WTI) crude slid $2.08, or 2.7%, to $74.20 a barrel. It fell as far as $73.82 earlier — its lowest since Dec. 27, 2021.
Both benchmarks, which hit 10-month lows last week, have posted three consecutive weekly declines. Brent ended the latest week down 4.6%, while WTI fell 4.7%.
“On top of growing concerns about weaker fuel demand in China due to a surge in COVID-19 cases, political uncertainty, caused by rare protests over the government’s stringent COVID restrictions in Shanghai, prompted selling,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
WTI’s trading range is expected to fall to $70-$75, he said, adding the market could stay volatile depending on the outcome of the OPEC+ meeting and the price cap on Russian oil.
China, the world’s top oil importer, has stuck with President Xi Jinping’s zero-COVID 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 restrictions flared for a third day and spread to several cities in the wake of a deadly fire in the country’s far west.
“Bearish sentiment is growing in the oil market with mounting concerns over demand in China and a lack of clear signs from oil producers to further cut output,” said Tetsu Emori, CEO of Emori Fund Management Inc.
“Unless OPEC+ agrees on a further reduction of production quota or the United States moves to reload its strategic petroleum reserves, oil prices may be headed further down,” he said.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, will meet on Dec. 4.
