Crude oil futures closed lower on Tuesday (May 3) as investors worried that China’s continued lockdown of Shanghai and strict measures to contain the spread of coronavirus in other cities could hurt the economy and oil demand. China is the world’s largest oil-importing country.
- WTI crude futures fell $2.76, or 2.6%, at $102.41 a barrel.
- BRENT crude futures were down $2.61, or 2.4%, at $104.97 a barrel.
Crude oil futures initially rose because the European Union (EU) wanted to impose sanctions on Russian oil. Germany has since abandoned its opposition to this measure. This initially caused prices to rise, but they later fell again. Investors are concerned about the possible decline in oil demand as a result of the lockdown measures in China.
Shanghai, China’s financial center, remains under lockdown. Meanwhile, China has taken strict measures in Beijing, including the rescheduling of large-scale COVID-19 tests, the closure of restaurants, gyms, shopping malls, cinemas and apartments in several areas. All schools have had to suspend classes since April 29, and no date has yet been set for the opening of schools.
Analysts expect oil prices to continue to fluctuate due to the impact of China’s lockdown measures, including concerns about the economic impact of an accelerated rate hike by the U.S. Federal Reserve (Fed).
Investors are waiting for the weekly U.S. oil inventory report, which will be published today by the U.S. Energy Information Administration (EIA). Analysts expected a decline in crude oil inventories by 800,000 barrels.
Investors will also be keeping an eye on the May 5 meeting of OPEC and OPEC+, which will set production policy for June.
The Spot Market is Open
Wednesday, May 4, 2022
|Crude Oil |