Commodities News

Oil Down, Fears of Further Lockdowns in China Increase Fuel Demand Concerns

By Gina Lee – Oil was down on Thursday morning in Asia as the latest COVID-19 outbreaks and fears of more lockdowns in China drove fuel demand fears.

Brent oil futures slid 1.44% to $103.44 by 12:31 AM ET (4:31 AM GMT) and WTI futures fell 1.36% to $100.63.

The Chinese capital city of Beijing reported 48 new symptomatic and two new asymptomatic COVID-19 cases for April 27, CCTV reported on Thursday. The city began a mass testing program to avoid a lockdown like the one that has been in place in Shanghai for a month.

The city of Hangzhou will also conduct mass COVID testing from Apr. 28, according to state media reported on Wednesday.

Concerns about tightening energy supplies globally added some support to the market. The tightening follows Russia’s invasion of Ukraine on Feb. 24 and subsequent sanctions on Russia by the U.S. and its allies. Russian energy giant Gazprom (MCX:GAZP) also followed through on its threat to halt gas supplies to Bulgaria and Poland on Wednesday.

Shell (AS:SHEL) said in trading documents that it would no longer accept refined oil blended with Russian products. Exxon Mobil (NYSE:XOM) also said it had declared force majeure on its Sakhalin-1 operations in Russia’s far east.

Meanwhile, Wednesday’s U.S. crude oil supply data from the U.S. Energy Information Administration showed a build of 692,000 barrels for the week to Apr. 22. Forecasts prepared by predicted a build of 2 million barrels, while an 8.020-million-barrel draw was recorded during the previous week.

Crude oil supply data from the American Petroleum Institute released the day before, showed a build of 4.780 million barrels.

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