MUSCAT: The price of Oman crude (for May 2022 delivery) slid $1.29 a barrel to reach $110.70 per barrel in trading on the Dubai Mercantile Exchange (DME) on Monday.
Oil prices tumbled more than $6 on Monday as fears over weaker fuel demand in China grew after financial hub Shanghai lockdown efforts to curb a surge in COVID-19 infections, said Reuters. Brent crude futures slid as low as $113.72 a barrel and were trading down $5.97, or 4.9 per cent, at $114.68 at 1212 GMT.
US West Texas Intermediate (WTI) crude futures hit a low of $106.81 a barrel, and were down $5.93, or 5.2 per cent, at $107.97.
Both benchmark contracts rose 1.4 per cent on Friday, notching their first weekly gains in three weeks, with Brent surging 11.8 per cent and WTI climbing 8.8 per cent.
Shanghai has entered a two-stage lockdown of 26 million people on Monday in an attempt to curb the further spread of the coronavirus.
“This is also prompting growing concerns that China’s strict zero-Covid policy will lead to repeated lockdowns in key business centres,” said Commerzbank analyst Carsten Fritsch in a note.
Oil demand in China, the largest crude importer globally, is expected to be 800,000 barrels per day (bpd) softer in April compared with “normal” levels as a result, said Bjarne Schieldrop, chief commodities analyst at SEB bank.
And the bullish reaction to a missile attack by Yemen’s Houthis on a Saudi oil distribution facility had ran its course on Friday, said Kazuhiko Saito, chief analyst at Fujitomi Securities.
But he expected the oil market to turn bullish when the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, meet on Thursday to discuss a planned 432,000 bpd increase in production quotas. The group, which has so far resisted calls to accelerate production rises to ease tight crude supply, was “less likely to raise oil output at a faster pace than in recent months,” Saito said. (With inputs from Reuters)
