Apr 25, 2022 04:25AM ET
By: AnalysisWatch
Oil fell to about a two-week low on Monday, extending last week's decline, as concerns grew that the prolonged COVID-19 shutdown in Shanghai and possible hikes in US interest rates would hurt global economic growth and oil demand.
In Shanghai, the authorities have erected fences outside residential buildings, prompting fresh public protests. In Beijing, many have started to store food in fear of a similar closure after a few cases were discovered.
Brent crude was down $4.63, or 4.3 percent, to $102.02 a barrel at 0913 GMT, reaching $101.94 earlier in the session, the lowest level since April 12. US West Texas Intermediate (WTI) crude was down $4.11, or 4 percent, to $97.96.
Oil also weakened due to the prospect of higher US interest rates, strengthening the US dollar. A strong dollar makes dollar-priced commodities more expensive for other currency holders and tends to reflect increased risk aversion among investors.
Both oil indices lost almost 5% last week on demand concerns and Brent has fallen sharply after reaching $139, the highest level since 2008, last month.
Oil was supported by tight supply. Russia's invasion of Ukraine has already reduced supply due to Western sanctions and customers avoiding buying Russian oil, but the market could tighten further with a possible EU ban on Russian crude.
The Times reported on Monday that the bloc was preparing "smart sanctions" against Russian oil imports, citing European Commission Vice President Valdis Dombrovskis.
Disruptions in Libya are also providing support. The Opec member is losing more than 550,000 barrels a day of production due to unrest, and the oil refinery in Zawiya has suffered damage after armed clashes.