Brent crude futures fell $8.17, or 6.8%, to settle at $112.48 a barrel. US West Texas Intermediate (WTI) crude futures were down $7.94, or about 7%, to stand in $105.96 a barrel.
Crude oil futures have remained volatile since the Russian invasion of Ukraine in late February. In the past week, Brent gained almost 12%, while WTI rose almost 9%.
Shanghai began a two-phase lockdown of 26 million people on Monday in a bid to curb the spread of COVID-19. Authorities closed bridges and tunnels and restricted road traffic.
“Fears that lock-ins will spread, coupled with a liquidation of long positions, have caused the market to decline further,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
Oil demand in China, the world’s biggest crude importer, is expected to be 800,000 barrels per day (bpd) lower than usual in April, said Bjarne Schieldrop, chief commodity analyst at SEB bank. Hopes for progress in Russia-Ukraine peace talks, which could start in Turkey on Tuesday, also weighed on prices.
However, analysts expect a more bullish environment when the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, meet on Thursday to discuss an expected 432,000 bpd increase in production quotas.
OPEC+ is likely to stick to plans for a modest increase in oil output in May, multiple sources close to the group said, despite rising prices due to the Ukraine crisis and consumer calls for more supply. .
OECD reserves are at their lowest point since 2014.
Source: Ambito
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