Oil Falls on Fears New Chinese Lockdowns Will Hit Consumption

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New Covid lockdowns in Shanghai stoked fears that fuel consumption in China will take a hit along with economic growth.

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Spencer Platt/Getty Images

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Oil prices fell on Monday after declining last week on signs of weakening demand.

Brent crude, the international benchmark, dropped more than 3% in early trading. West Texas Intermediate, the US standard, also slipped.

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The new Covid lockdown in Shanghai stoked fears that fuel consumption in China will take a hit along with economic growth.

Meanwhile, the Federal Reserve has set expectations for a half-point interest-rate rise at its May meeting. The central bank for the world’s largest economy is trying to rein in the fastest inflation in decades. The Fed’s stance risks sparking a downturn later in the year.

The surge in energy prices this year is also incentivizing firms to increase production. US companies added oil and gas rigs for a fifth week.

On the other hand, there are factors that should keep a floor under oil prices. The war in Ukraine still threatens supply from Russia. The European Union is considering more sanctions on Russian exports, the Times of London reported, citing an interview with European Commission Vice President Valdis Dombrovskis.

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Credit: www.marketwatch.com /

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