HONG KONG: WTI crude fell more than 5% on Tuesday to below $100 a barrel as concerns over a possible slowdown in China’s economy led investors to reconsider their demand expectations.
The contract fell 5.7% to $97.13, while Brent crude fell 6% to $100.54.
Oil prices tumbled in just over a week as the United States and Britain banned crude imports from Russia, the world’s third-largest commodity producer, and Vladimir Putin’s war in Ukraine sparked supply concerns.
China announced on Sunday it would lock down the tech hub of Shenzhen, a city of 17 million and one of the country’s largest, as the rapid spread of Omicron has led to a surge in infections across the country.
With China the world’s biggest importer of crude, the move has shot a hole through expectations for demand, while a flicker of optimism over Russia-Ukraine peace talks were also weighing on the market.
“Sentiment in commodity markets remains driven by headlines, with talks between Russia and Ukraine raising hopes that supply disruptions will be minimal,” Daniel Hynes, at Australia & New Zealand Banking Group, said.
“This should see oil prices come under increasing pressure. However, it doesn’t reflect the fundamental picture, with Russian oil becoming increasingly isolated.”