New Delhi: Oil prices dropped on Monday as a result of worries that expanding COVID-19 restrictions in China will reduce demand, countering indications that production at the largest US shale field is slowing down. After falling 1.2% on Friday, Brent crude futures were down 36 cents, or 0.4%, to $95.41 a barrel by 0151 GMT.
After falling 1.3% on Friday, U.S. West Texas Intermediate (WTI) oil was trading at $87.67 per barrel, down 23 cents, or 0.3%. Wider COVID restrictions in China always cause worries about demand from the largest petroleum importer in the world, according to Stephen Innes of SPI Asset Management. As outbreaks grew wider, Chinese localities strengthened their adherence to Beijing’s zero-COVID policy, quashing earlier expectations of a recovery in demand.
WTI is still supported, however, by signs from significant US producers that the Permian Basin, the country’s main shale resource, is slowing down in terms of productivity and volume growth. The warnings were issued as U.S. oil shipments reached record levels last week, which helped to drive up WTI prices by 3.4%. Last week, Brent saw a 2.4% increase, marking its second straight weekly gain.
Separately, according to People’s Bank of China Governor Yi Gang, the country’s central bank reiterated its current policy goals of maintaining a reasonable level of liquidity and boosting credit support for the real economy.
Despite growing usage of renewable energy and electric vehicles, the Organization of the Petroleum Exporting Countries is anticipated to maintain its stance that oil consumption will rise for another ten years in its upcoming outlook, according to two OPEC sources. Huge energy company earnings, like those of Exxon Mobil Corp. and Chevron Corp., have also rekindled calls for windfall taxes.