Title: Oil down $1 on China growth worries, while EU weighs Russian crude ban

May 2, 2022, 01:30 AM ET

By: AnalysisWatch

Oil prices fell in holiday-related trading in Asia on Monday as concerns about weak economic growth in China, the world's largest oil importer, outweighed fears of a possible supply squeeze due to a looming European Union ban on Russian crude.

At 01:11 AM ET, Brent crude futures were down $1.13, or 1.1%, at $106.01 a barrel, while West Texas Intermediate (WTI) crude futures were down $1.01, or 1%, at $103.69 a barrel. Japan, India, and markets across Southeast Asia were closed Monday for the holidays.

Prices fell after China released data on Saturday showing factory activity in the world's second-largest economy fell for a second month to the lowest level since February 2020, due to COVID shutdowns.

On the supply side, Libya's National Oil Corp (NOC) said Sunday it would temporarily resume operations at the Zueitina oil terminal to draw down stocks in storage tanks and avert an "imminent environmental disaster" at the port.

In late April, the NOC declared force majeure for some supplies at Zueitina as political protests forced a number of oil facilities to suspend operations.

The downward trend in oil prices will be limited by a possible supply dip as the European Union leans toward banning imports of Russian oil by the end of the year, two EU diplomats said after talks between the European Commission and EU member states over the weekend.

About half of Russia's 4.7 million barrels per day (bpd) of crude oil exports go to the EU, which will use them to cover about a quarter of its oil imports in 2020.

While Western countries have curtailed their purchases of Russian oil as sanctions have affected shipping and insurance for the country's exports, the impact on global supply has been cushioned by India's taking heavily discounted Russian cargoes.