Oil prices fell on Tuesday as recession concerns and worsening COVID-19 outbreaks in China sparked fears of lower fuel demand, outweighing supply worries.
Brent crude fell 31 cents, or 0.3%, to $97.61 a barrel by 0434 GMT, while U.S. West Texas Intermediate (WTI) crude fell 36 cents, or 0.4%, to $91.43 a barrel. Both benchmarks hit their highest since August on Monday amid reports that leaders in China, the world’s top crude importer, were weighing an exit from the country’s strict COVID-19 restrictions.
However, Chinese health officials over the weekend reaffirmed China’s commitment to its strict zero-COVID policy. Also, recent data showed the country’s exports and imports unexpectedly contracted in October. COVID cases sharply escalated in Guangzhou and other major Chinese cities, official data showed on Tuesday.
The global manufacturing hub is fighting its worst flare-up ever, testing its ability to avoid a Shanghai-style citywide lockdown.
“I think the rolling lockdowns, not to mention doubling down on zero-COVID over the weekend, are not only roiling the long-positioned oil market but they continue to push back the reopening narrative negatively for oil prices,” said Stephen Innes, managing partner at SPI Asset Management.
