Oil drops 3% on China’s COVID-19 brakes, stronger dollar
- Brent and WTI hit 2.5-week lows
- China Reports Increase in New COVID-19 Cases
- China’s crude imports in July drop 20% year on year
LONDON, Aug. 9 (Reuters) – Oil prices fell more than 3% on Monday, extending last week’s steep losses amid a rising US dollar and fears that further coronavirus restrictions in Asia, especially in China, does halt the global recovery in fuel demand.
Brent crude futures fell $ 2.43, or 3.5%, to $ 68.27 a barrel at 8:00 a.m. GMT after falling 6% last week to their biggest weekly loss in four months .
US West Texas Intermediate (WTI) crude futures fell $ 2.41, or 3.6%, to $ 65.87 after plunging nearly 7% last week on their steepest decline weekly in nine months.
“Concerns about the potential erosion of global oil demand have resurfaced with the acceleration in the rate of Delta variant infection,” RBC analyst Gordon Ramsay said in a note.
ANZ analysts pointed out that the new restrictions in China, the world’s second largest consumer of oil, are a major factor clouding the outlook for demand growth.
The restrictions include flight cancellations, warnings from 46 cities against travel, and limits on public transport and taxi services in 144 of the worst-affected areas.
China reported 125 new cases of COVID-19 on Monday, up from 96 a day earlier. In Malaysia and Thailand, infections are reaching daily highs. Read more
China’s export growth slowed more than expected in July after outbreaks of COVID-19 cases and flooding, while import growth was also weaker than expected. Read more
“Both contracts (for benchmark crude) appear vulnerable to further bad news on the virus front, focusing on mainland China,” said Jeffrey Halley, senior market analyst at OANDA, in a note.
China’s crude oil imports fell in July and fell sharply from record levels in June 2020. read more
A rally in the US dollar to a four-month high against the euro also weighed on oil prices after the stronger-than-expected US jobs report on Friday prompted betting that the Federal Reserve could act faster to tighten US monetary policy.
A stronger US dollar makes oil more expensive for holders of other currencies.
Reporting by Dmitry Zhdannikov Additional reporting by Sonali Paul Editing by David Goodman
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