Oil Slides About 7% On Concerns of Weaker Chinese Demand

• Crude Oil prices tumbled about 7% on Monday after China's financial hub of Shanghai launched a lockdown to curb a surge in COVID-19 infections, prompting renewed fears of demand destruction. 
• Brent crude futures fell $8.17, or 6.8%, to settle at $112.48 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell $7.94, or about 7%, to settle at $105.96 a barrel. Crude futures have been volatile since Russia's invasion of Ukraine in late February. Last week, Brent gained nearly 12%, while WTI rose almost 9%. 
• Shanghai has entered a two-stage lockdown of 26 million people on Monday in an attempt to curb the spread of COVID-19. Officials closed bridges and tunnels and restricted highway traffic. Andrew Lipow, president of Lipow Oil Associates in Houston said that the fear that the lockdowns could spread combined with a sell-off has resulted in further decline of the market. 
• The news impacted the global oil market because China is the world´s biggest crude consumer. The nation uses around 15Mn barrels per day, and imported 10.3Mn barrels per day in 2021, according to Andy Lipow, president of Lipow Oil Associates. However, in light of the renewed lockdown restrictions, oil demand in China, the largest crude importer globally, is expected to be 800,000 barrels per day (bpd) softer than usual in April, said Bjarne Schieldrop, chief commodities analyst at SEB bank. 
• Hopes for progress in peace negotiations between Russia and Ukraine, which could start in Turkey on Tuesday, also weighed on prices. However, analysts expect more bullish sentiment when the Organization of the Petroleum Exporting Countries (OPEC) and allies, collectively known as OPEC+, meet on Thursday to discuss a planned 432,000-bpd increase to production quotas.

(Source: Reuters)