© Reuters. FILE PHOTO: Crude oil is seen on a sticker on the side of a Permian Basin storage tank in Menton, Texas, U.S., Nov. 22, 2019. Photo taken on November 22, 2019. REUTERS/Angus Mordant
LONDON (Reuters) – Oil prices fell alongside stocks on Monday and were weighed down by a stronger dollar and demand concerns over the ongoing coronavirus lockdown in China, the world’s top oil importer.
It was down $2.88, or 2.6 percent, at $109.51 a barrel by 1351 GMT. U.S. West Texas Intermediate crude was at $106.73 a barrel, down $3.04, or 2.8 percent. Both contracts are up more than 40% so far this year.
The dollar hit a fresh 20-year high, making oil more expensive for holders of other currencies. [MKTS/GLOB]
Global financial markets were spooked by concerns over interest rate hikes and recession fears, as China’s tighter and wider COVID-19 lockdown slowed export growth in the world’s second-largest economy in April.
“The extent of the damage to Chinese oil demand has not been fully felt,” said Stephen Brennock, an analyst at PVM, adding that he expects oil demand forecasts from the International Energy Agency and others to be revised down in upcoming data.
China’s crude oil imports fell 4.8% in the first four months compared with the same period last year, but included a nearly 7% increase in April.
On the supply side, Saudi Arabia, the world’s largest oil exporter, lowered crude prices in Asia and Europe in June.
In Russia, where oil production rose in early May from April, output has stabilized after falling in April due to Western sanctions over the Ukraine crisis, Deputy Prime Minister Alexander Novak said.
EU-Russian oil embargo
Last week, the European Commission proposed a phased embargo on Russian oil, pushing up Brent and WTI prices for a second week in a row. However, the proposal requires a unanimous vote among EU member states this week, which has yet to happen.
The European Commission is considering more money to upgrade oil infrastructure to landlocked countries in Eastern Europe to persuade them to agree, an EU source told Reuters on Monday.
Japan, the top five crude importer, will ban Russian crude imports “in principle”, Prime Minister Fumio Kishida said, adding that it would take time.