SINGAPORE (Reuters) – Oil prices fell on Tuesday as fresh COVID-19 curbs in China, the world’s biggest crude importer, and fears of a global economic slowdown weighed on oil demand prospects. fuel.
Brent futures for September fell $1.47, or 1.4%, to $105.63 a barrel at 00:57 GMT, while U.S. West Texas Intermediate crude for August delivery was at $102.50 a barrel, down $1.59, or 1.5%.
“Growing fears of a recession and continued weak demand in China are driving down oil prices, although current supply and demand balances remain precarious,” said analysts at consultancy Eurasia Group. in a note.
Several Chinese cities are adopting new COVID-19 restrictions, from business shutdowns to closures, to curb new infections as the highly infectious BA.5.2.1 subvariant has been detected in the country.
However, Western sanctions against Russia over the war in Ukraine, which Russia calls a “special military operation”, have disrupted crude and fuel trade flows.
There have also been other cuts to energy supply routes from Russia, a major supplier of oil, fuel and natural gas to Europe, which have traders and utilities on edge.
Concerns about a disruption to the Caspian Pipeline Consortium (CPC) system eased after a Russian court on Monday overturned an earlier ruling suspending pipeline operations for 30 days.
However, traders and analysts still fear Russia will suspend the pipeline, which carries oil from Kazakhstan to the Black Sea, potentially disrupting 1% of the world’s crude supply.
Additionally, spare capacity in the Organization of the Petroleum Exporting Countries is being depleted, with most producers pumping at maximum capacity.
US President Joe Biden will advocate for more OPEC oil production when he meets with Gulf leaders in Saudi Arabia this week, White House national security adviser Jake Sullivan said on Monday. .
“Saudi Arabia is not expected to add significant volumes in the near term, despite President Joe Biden’s impending visit, as Riyadh will prioritize its commitment to market management and maintaining spare capacity for losses. emergency,” Eurasia analysts said.
In the United States, crude and gasoline inventories fell last week, while distillate inventories likely rose, a preliminary Reuters poll showed on Monday. [EIA/S]
(Reporting by Florence Tan; Editing by Christian Schmollinger)
Copyright 2022 Thomson Reuters.