© Reuters. FILE PHOTO: A faucet and meter exhibits zero stage stress on Druzhba oil pipeline at Hungarian oil and gasoline group MOL’s primary Duna (Danube) refinery in Szazhalombatta January 9, 2007. REUTERS/Laszlo Balogh
By Yuka Obayashi
TOKYO (Reuters) – Oil costs prolonged losses on Monday amid persistent worries that extended COVID-19 lockdowns in Shanghai and potential U.S. price hikes would dent international financial development and gas demand.
futures slid $1.90, or 1.8%, to $104.75 a barrel at 0015 GMT, whereas U.S. West Texas Intermediate (WTI) crude futures fell $1.89, or 1.9%, to $100.18 a barrel.
The benchmarks misplaced almost 5% final week on demand issues.
“Bearish sentiment outweighed issues over tight international provide as China continued lockdowns in Shanghai and buyers ready for a sequence of U.S. price hikes,” stated Hiroyuki Kikukawa, basic supervisor of analysis at Nissan (OTC:) Securities.
Traders try to regulate their positions earlier than the U.S. summer season driving season kicks off later in Could, he stated.
“However oil costs aren’t anticipated to fall under $90 a barrel because of the prospect of a possible ban by European Union on Russian oil amid a deepening Ukraine disaster,” he stated.
Shanghai authorities battling an outbreak of COVID-19 have erected fences outdoors residential buildings, sparking recent public outcry over a lockdown that has compelled a lot of town’s 25 million folks indoors.
The U.S. Federal Reserve Chairman Jerome Powell has indicated {that a} half-point rate of interest enhance “shall be on the desk” when the Fed meets in Could to approve the following in what are anticipated to be a sequence of hikes this yr.
On the availability facet, U.S. power companies added oil and rigs for a fifth straight week amid excessive costs and prodding by the federal government.
In Europe, the Russia-Kazakh Caspian Pipeline Consortium (CPC) was resuming full exports from April 22 after nearly 30 days of disruptions following repairs on one in every of its key loading amenities, three sources aware of the port loading plan instructed Reuters on Friday.
Nonetheless, some analysts say the worsening disaster in Ukraine might increase stress on the EU to sanction Russian oil and costs might transfer greater later this yr.
Russia is Europe’s prime gasoline provider and the world’s second-biggest oil exporter after Saudi Arabia.
Morgan Stanley (NYSE:) raised its third-quarter worth forecast for Brent by $10 per barrel to $130 citing a “larger deficit” this yr attributable to decrease provide from Russia and Iran, which is prone to outweigh short-term demand headwinds.