Oil falls below $100/barrel as China lockdown threatens demand
The benchmark oil price on Tuesday fell below $100 a barrel for the first time since March 1 on expectations that the lockdown could dent gasoline demand in China, the world’s biggest crude importer. .
Brent crude, the international oil index, fell as much as 9% to as low as $97.44 a barrel. The US crude oil contract with West Texas Intermediate also fell about 9% to $93.53. In the New York afternoon, both benchmarks pulled back from session lows, but remained in the negative territory for the day.
Oil prices were at their highest since 2008 earlier this month, as Russia’s isolation from the international community over its invasion of Ukraine began to limit the country’s crude exports.
Pressure on the oil market eased slightly in recent days as the number of Covid-19 infections in China rose to the highest level since the virus first emerged more than two years ago. lock prompt in some of the country’s main production centers.
However, oil analysts also think the sell-off could be short-lived. Louise Dickson, senior oil analyst at Rystad Energy, said: “The buyback of cheaper oil may not be as much anymore, as falling prices suggest that the market has not yet fully realized the potential impact of the loss of majors. Russian barrels for global supply.”
Stock markets in China and Hong Kong posted a the second day fell sharply about concerns about the outbreak as well as reports that Beijing has signaled its readiness to provide military assistance to Russia in support of its invasion of Ukraine.
Hong Kong’s benchmark Hang Seng Index fell 5.7%, while the Hang Seng China Enterprises index of large and liquid Chinese stocks fell 6.6%. In China, the CSI 300 index of stocks listed in Shanghai and Shenzhen fell 4.6%.
Falling oil prices sent US stocks higher on Tuesday even as traders braced for a Federal Reserve rate hike on Wednesday. Economists expect the central bank to raise by a quarter – its first rate hike since 2018 – as the war in Ukraine risks exacerbating inflation already at an annual high in 40 years.
A report from the Bureau of Labor Statistics on Tuesday showed a 10% annual increase in US manufacturer’s price in February, setting the stage for the Fed to raise rates.
Wall Street’s benchmark S&P 500 rose 1.4%, with every market sector gaining except energy. The tech-heavy Nasdaq Composite, down 18% to date, is up 1.8%.
Meanwhile, Europe’s regional Stoxx 600 index ended the day down 0.3%. Germany’s Dax lost 0.1% and France’s Cac 40 index fell 0.2%. In London, the FTSE 100 closed 0.2% lower.
Peter Oppenheimer, chief global equity strategist at Goldman Sachs, said Russia’s invasion of Ukraine late last month had put Europe “on the brink of recession,” said Peter Oppenheimer, chief equity strategist. at Goldman Sachs, adds that the war will fuel inflation and stifle growth.
In the government debt market, the yield on the 10-year US Treasury note rose 0.01 percentage points to 2.14% on Tuesday, hovering around its highest level since 2019, the level it hit. earlier in the day. The German 10-year Bund yield, which acts as a barometer for eurozone borrowing costs, fell 0.04 percentage points to 0.33%.
Additional reporting by Derek Brower in New York, Neil Hume in London and Tabby Kinder in Bangkok