Crude oil futures closed on Tuesday with a minus of more than 6%. Markets were under pressure after China announced a lockdown in Shenzhen to contain the spread of the coronavirus. The current cluster of covid cases in China is expected to affect oil demand.
Investors’ expectations for progress in the peace talks between Russia and Ukraine also contributed to the decline in crude oil contracts.
- WTI crude futures were down $6.57, or 6.4%, at $96.44 a barrel.
- BRENT crude futures were down $6.99, or 6.5%, at $99.91 a barrel.
The Chinese government has announced a lockdown of Shenzhen for at least a week to contain the spread of COVID-19. This has raised concerns about traffic and production bottlenecks in Shenzhen, China’s technology hub and one of its most important ports.
Meanwhile, China has imposed a lockdown on Jilin Province, which borders Russia. This is the first time since 2020 that the Chinese government has decided to seal off an entire province.
Morgan Stanley has lowered its growth forecast for China in the first quarter of this year to 0% from 0.6% previously and expects China to miss its growth target this year.
Meanwhile, the fourth round of peace talks on the Ukraine crisis is expected. Russian President Vladimir Putin and President of the European Council Charles Michel had a telephone conversation yesterday to discuss the situation in Ukraine.
Investors are waiting for the weekly report on U.S. crude oil inventories, which is to be released today by the EIA.
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Wednesday, March 16, 2022