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Title: Oil slides as renewed China COVID curbs temper fuel demand outlook

Jul 12, 2022 03:00AM ET

By: AnalysisWatch

Oil prices fell on Tuesday as new COVID-19 curbs in China, the world's biggest crude importer, and fears of a global economic slowdown weighed on the outlook for fuel demand.

Brent crude futures for September were down $1.81, or 1.7%, at $105.29 a barrel by 0633 GMT, while US West Texas Intermediate crude for August was at $102.14 a barrel, down $1.95, or 1.9%.

Several Chinese cities have imposed new COVID-19 bans, ranging from business bans to lockdowns, to contain new infections as the highly infectious BA.5.2.1 sub-variant emerges in the country.

However, he said the fundamentals were constructive given the tight supply situation, which is expected to continue for at least the rest of the year, and would limit price declines.

Western sanctions against Russia over the war in Ukraine, which Russia calls a "special military operation", have disrupted trade flows for raw materials and fuels.

US Treasury Secretary Janet Yellen is in Asia to discuss further tightening of sanctions, including setting a price cap on Russian oil to limit Moscow's gains and bring down energy prices.

International Energy Agency Executive Director Fatih Birol said any price caps on Russian oil should also apply to refined products.

Oil prices also fell as concerns about a disruption to the Caspian Pipeline Consortium (CPC) system eased after a Russian court on Monday overturned an earlier ruling suspending the pipeline's operations for 30 days.

However, traders and analysts remain concerned that Russia will suspend the pipeline, which transports oil from Kazakhstan to the Black Sea. A suspension could disrupt 1% of the world's crude oil supply.

In addition, spare capacity from the Organisation of Petroleum Exporting Countries is running low as most producers are pumping at maximum capacity.

US President Joe Biden will push for higher oil production by OPEC when he meets with Gulf leaders in Saudi Arabia this week, White House national security adviser Jake Sullivan said on Monday.

In the United States, crude oil and gasoline inventories fell last week, while distillate stocks likely rose, a preliminary Reuters poll showed on Monday.

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