Oil rigs seen during shale oil and gas drilling in Vaca Muerta, Patagonian province of Neuquén, Argentina, January 21, 2019. REUTERS / Agustin Marcarian / File photo
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- Mass testing of COVID for the Chaoyang district of Beijing
- US inflation data raises fears of further large interest rate hikes
- Anxiety halves oil production in Libya
LONDON, June 13 (Reuters) – Oil fell about $ 2 a barrel on Monday as the COVID-19 outbreak in Beijing dashed hopes for a resumption of Chinese demand, while worries about further interest rate hikes to control the boom inflation added extra pressure.
Beijing’s most populous neighborhood, Chaoyang, has announced three rounds of mass testing to quell a “ferocious” outbreak of COVID-19 that surfaced last week. Mass tests will be held until Wednesday. Read more
Brent crude fell $ 1.86, or 1.5 percent, to $ 120.15 at 09:07 GMT, while West Texas Intermediate crude fell $ 2.15, or 1.8 percent, to $ 118. , $ 52.
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“The current drop in prices is exacerbated by warnings of a” fierce “spread of the COVID virus in Beijing by officials, which calls into question the immediate recovery in demand,” said Tamas Varga of oil broker PVM.
Concerns about a further rise in interest rates, heightened by US inflation data on Friday, which showed that the US consumer price index rose 8.6% last month, also pushed oil lower and the weight of financial markets.
The data warns markets that the Federal Reserve could tighten policy for too long and cause a sharp slowdown. The Fed’s next political decision is on Wednesday.
Oil rose in 2022 as Russia’s invasion of Ukraine exacerbated supply concerns and after oil demand recovered from the COVID blockade. Brent reached $ 139, the highest level since 2008, in March, and both oil benchmarks rose more than 1 percent last week.
Supplies remain limited, with OPEC and its allies unable to fully meet the promised increase in production due to a lack of capacity in many producers, sanctions against Russia and production in Libya halved by roughly half.
“Supply and demand dynamics remain in price,” said Jeffrey Halle of brokerage OANDA, who saw the prolonged oil sell-off as unlikely “unless US markets go into full recession” and there are new blockages in China. .
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Additional reports by Florence Tan and Mohi Narayan Edited by Mark Potter
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