Oil prices erase 2022 gains as China protests spark demand concerns

  • WTI lowest since December 2021, Brent lowest since January 2022
  • Shanghai clashes as COVID protests erupt across China
  • Investors focus on the upcoming OPEC+ meeting on December 4

Nov 28 (Reuters) – Oil prices fell near their lowest level this year on Monday as street protests against tough COVID-19 restrictions in China, the world’s biggest crude importer, fueled concerns about the outlook for fuel demand.

Brent crude fell $2.67, or 3.1%, to trade at $80.96 a barrel at 1330 GMT, after plunging more than 3% to $80.61 earlier in the session to its lowest level since January. 4.

U.S. West Texas Intermediate (WTI) crude slid $2.09, or 2.7%, to $74.19 after hitting its lowest since Dec. 21. 22 last year at $73.60.

Both benchmarks, which hit 10-month lows last week, posted three consecutive weekly declines.

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“In addition to growing concerns over declining fuel demand in China due to an increase in COVID-19 cases, political uncertainty caused by rare protests against the government’s strict COVID restrictions in Shanghai prompted the sale,” said Hiroyuki Kikukawa, general manager of research at Nissan. Securities.

Markets looked volatile ahead of an OPEC+ meeting this weekend and an impending G7 price cap on Russian oil.

China has stuck to President Xi Jinping’s zero COVID policy even as much of the world has lifted most restrictions.

Hundreds of protesters and police clashed in Shanghai on Sunday night as protests over the restrictions erupted for a third day and spread to several cities.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, a group known as OPEC+, will meet on December 21. 4. In October, OPEC+ agreed to cut its production target by 2 million barrels per day through 2023.

Meanwhile, diplomats from the Group of Seven (G7) and the European Union have discussed capping Russian oil prices at between $65 and $70 a barrel, in a bid to limit revenue to fund the offensive. Moscow’s military in Ukraine without disrupting world oil markets.

However, EU governments were divided on the level at which to cap Russian oil prices, with the impact potentially muted.

“Discussions will continue on a price cap, but it looks like it won’t be as strict as expected, to the point that it might be unnecessary,” said Craig Erlam, senior market analyst at OANDA.

β€œThe threat to Russian production from a $70 cap, for example, is minimal given that it is already selling around those levels.”

The price cap is expected to come into effect on December 1. 5 when an EU ban on Russian crude also comes into effect.

Reporting by Noah Browning Additional reporting by Yuka Obayashi in Tokyo and Mohi Narayan in New Delhi Editing by Kirsten Donovan and David Goodman

Our standards: The Thomson Reuters Trust Principles.

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