Crude Oil Prices Drop More Than 4% After Reports of Falling Demand in China

Crude oil futures closed lower on Monday (April 11) as investors were concerned about the spread of the coronavirus in China, which will affect oil demand. In addition, more crude oil will soon return to the market as the International Energy Agency (IEA) and its member nations have decided to release crude oil from strategic reserves.

  • WTI crude futures fell $3.97, or 4.0%, at $94.29 a barrel.
  • BRENT crude futures fell $4.30, or 4.2%, at $98.48 a barrel.

Crude oil futures fell after energy consultancy Eurasia Group found that fuel demand in China, the world’s largest oil importer, has slowed sharply. The reason is the spread of COVID-19 and lockdowns in cities like Shanghai.

Eurasia Group said that despite reports, China has begun to ease lockdown measures in Shanghai, China’s financial center. However, the Chinese government will continue to adhere to the zero covid policy, which will affect oil demand. The Shanghai lockdown is expected to reduce total oil consumption in China by 1.3 million barrels per day.

Oil contracts have already been under pressure since last week, following the IEA’s decision to withdraw 60 million barrels of oil from member countries’ oil reserves over the next six months. The U.S. will also contribute 60 million barrels of oil as part of President Joe Biden’s plan to withdraw 180 million barrels.

The IEA has 31 member countries, the largest of which are the United States, the United Kingdom, Germany, France, Canada, Japan, and South Korea.

Investors are waiting for the weekly report on U.S. crude oil inventories to be released by the EIA tomorrow.

The Spot Market is Open

Thursday, April 12, 2022

Energy
Updated at
USD
Price

Change

%Change
Crude Oil
10.20

96.27

+1.98

2.10%

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