Oil prices slide as China’s COVID-19 curbs, the possibility of rate hikes affects demand outlook According to Reuters

© Reuters. FILE PHOTO: An IPC Petroleum France oil pump is seen at dusk outside Soudron, near Reims, France, August 24, 2022. REUTERS/Pascal Rossignol/File Photo

By Florence Tan

SINGAPORE (Reuters) – Oil prices slid in Asian trade on Monday on prospects for further rate hikes in the United States and Europe to quell inflation and the imposition of strict COVID-19 restrictions in China. China has overshadowed the global demand outlook.

Futures fell 78 cents, or 0.9%, to $86.01 a barrel by 0040 GMT, after being 4.1% higher on Friday. West Texas Intermediate crude was at $92.11 a barrel, down 73 cents, or 0.8%, after gaining 3.9% in the previous session.

Prices were little changed last week as gains from nominal supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, were offset offset by the ongoing lockdowns in China, the world’s top crude oil importer.

China’s oil demand could fall for the first time in two decades this year as Beijing’s COVID-free policy helps people stay home during holidays and reduces fuel consumption.

Commonwealth Bank of Australia (OTC) analyst Vivek Dhar wrote in a note: “Concerns about demand centered on the impact of rate hikes to combat inflation and the country’s COVID-zero policy. China.

The European Central Bank and the Federal Reserve are poised to raise interest rates further to tackle inflation, which could lift the value of the US dollar against the currency and drive up oil prices in US dollars. la becomes more expensive for investors.

However, global oil prices could recover later in the year – supply is expected to tighten further when the European Union embargo on Russian oil takes effect on December 5.

The G7 will implement a price cap on Russian oil to limit lucrative Russian oil export revenues following the February invasion of Ukraine, and plans to take measures to ensure that oil can still flow. to emerging countries. Moscow calls its actions in Ukraine “a special operation”.

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