WTI Crude Oil fell more than 1% toward $91 per barrel on Monday as Chinese authorities reiterated their commitment to the stringent zero-Covid approach over the weekend, dashing hopes for a policy pivot that was expected to revive demand in the world’s top crude importer.
A top health official in China defended the country’s current Covid controls, saying “previous practices have proved that our prevention and control plans and a series of strategic measures are completely correct.”
The US oil benchmark rallied 5% on Friday as speculation circulated last week that China is planning to gradually ease Covid restrictions.
A tightening supply outlook also kept upward pressure on oil prices after OPEC+ agreed to reduce output by 2 million barrels per day in November, the largest cut since the start of the pandemic. Moreover, the European Union ban on Russian oil set to take effect in December, adding to supply concerns.
Earlier Crude oil increased to a 9-week high of 96.77 USD/Bbl on Friday after losing 1.6% in the previous session, weighed down by renewed fears that continued monetary tightening by major central banks may trigger a global recession cause crude oil price high .
With the Federal Reserve, European Central Bank and Bank of England all delivering a supersized 75 basis point rate hike in their latest policy meetings, analysts warned about the economic risks of rapid rate rises that could take a toll on energy demand.
A fresh rally in the dollar also pressured oil prices, as well as lingering uncertainties surrounding China’s Covid Zero policy. These demand factors have recently overshadowed a tightening supply outlook ahead of winter, with OPEC+ implementing large output cuts from this month, while the European Union ban on Russian oil is set to take effect in December