WTI up slightly, Brent down 3% – Fears of a Chinese lockdowns weigh on demand

Crude futures closed slightly higher Tuesday (Sept. 6), while Brent futures fell 3% as investors worried that global central banks would continue to raise interest rates and that China’s lockdown of key cities would hurt the economy and oil demand.

  • WTI crude futures were up 1 cent at $86.88 a barrel.
  • BRENT crude futures fell $2.91, or 3%, at $92.83 a barrel.

Investors are alarmed about slowing oil demand after China continues its lockdown of key cities such as the city of Chengdu, the capital of Sichuan province.

Guiyang, the capital of Guizhou province, has ordered municipal lockdowns in six of its ten districts. Guiyang is home to around 6.1 million people and is home to several car manufacturers, including Geely Automobile Holdings.

At the same time, the strength of the dollar has made dollar-settled crude oil contracts more expensive for investors holding other currencies.

The dollar index against the six major currencies of a basket of currencies rose 0.35% to 110.2140.

Markets are also influenced by concerns about interest rate hikes by major central banks around the world. Investors expect the European Central Bank (ECB) to raise interest rates at its meeting on September 8.

Concerns about the impact of lockdowns and central bank rate hikes have taken a back seat to the decision by OPEC and OPEC+ to cut production by 100,000 barrels per day in October. This is the first production cut since 2020 to support global oil prices.

The Spot Market is Open

Wednesday, September 7, 2022

Energy
Updated at
USD
Price

Change

%Change
Crude Oil
11.45

85.38

-1.50

-1.73%

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