Oil prices plunged about US $ 4 earlier this week. Sentiment emerged on concerns over slower demand for fuel in China after authorities imposed a nine-day lockdown in Shanghai due to a spike in Covid-19 cases.
Monday (28/3), the price of Brent crude oil futures for May 2022 delivery fell 3.2% to US$ 116.77 per barrel. Meanwhile, the price of West Texas Intermediate (WTI) crude oil futures for May 2022 delivery fell 3.4% to US$ 109.98 per barrel.
The crude market started the week with another uncertainty after being hit by the war between Ukraine and Russia, the world's second-largest crude exporter. In addition, the expansion of the Covid-19-related lockdown in China, which is the world's largest importer of crude oil.
"The Shanghai lockdown prompted a fresh sell-off from investors who were disappointed as they expected such a lockdown to be avoided," said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.
Kazuhiko added that the market had taken into account the impact of the missile attack on Saudi oil distribution facilities last Friday. As is known, Yemen's Houthis launched an attack on Saudi Arabia's energy facilities which caused fires in two storage tanks but there were no casualties.
"Still, as OPEC+ is less likely to increase oil output at a faster pace than in recent months, we expect the oil market to turn bullish again later this week," he said.
However, the Shanghai municipal government's decision ordering all companies and factories to suspend manufacturing or have people work remotely in a two-stage lockdown for nine days, after the city reported a new daily record for asymptomatic COVID-19 infections.
Further weakening demand for fuel, public transportation, including ride-hailing services, will also be suspended during the lockdown.
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