New Delhi : Crude oil prices fell over 4% on Monday as rising cases of the coronavirus in China raised fears of curbs on mobility and a resultant impact on fuel demand.
Experts said the increase in fresh cases in Beijing affected the market sentiment. China’s major trading center Shanghai is already under lockdown.
Moreover, fears of a rate hike by the US Federal Reserve also affected the sentiment as any increase in interest rates would hamper growth.
At the time of writing this report, the benchmark Brent futures June contract on the Intercontinental Exchange was trading at $101.94 a barrel, up 4.42% from its previous close. West Texas Intermediate’s June contract fell 4.34% to $97.64 a barrel on the NYMEX.
Ravindra Rao, Head of Commodity Research at Kotak Securities, said that along with demand concerns, expectations of an improvement in supply from Libya also weighed on oil prices. “Crude may remain under pressure on concerns about the Chinese economy; However, there may not be a sharp fall with the supply risk getting bigger,” Rao said.
Although oil prices hit multi-year highs after Russia’s invasion of Ukraine last month, they have been largely subdued in the past three weeks due to the unfolding COVID-19 scenario in China and its potential impact on the global economy. are in.
Last week, the International Monetary Fund (IMF) lowered its forecast for global economic growth to 3.6% in 2022 and 2023 from an estimated 6.1% in 2021. “This is 0.8 and 0.2 percentage points lower for 2022 and 2023 projected in January,” the IMF said.
However, in the coming days, Kotak Institutional Equities said energy prices are expected to remain higher.
“Energy prices could remain elevated or move forward given the low prospect of a peaceful resolution of the Russo-Ukraine war and the growing prospect of Europe reducing its energy imports from Russia.”