Oil declines as China's COVID restrictions threaten fuel demand

Oil declined in tandem with equities as China’s stringent measures to curb COVID-19 threatened a further hit to economic activity and fuel demand.

Oil declined in tandem with equities as China’s stringent measures to curb COVID-19 threatened a further hit to economic activity and fuel demand. 

West Texas Intermediate futures slid 3.4 per cent as data showing a sharp economic contraction in the world’s top oil importer outweighed growing expectations that Europe may agree to curb crude purchases from Russia. Beijing is set to close gyms and cinemas over the Labor holiday that lasts through Wednesday, and Shanghai will keep virus measures in place.

Prices

“China growth concerns are a key driver, coming on top of general risk-averse sentiment and signs that high fuel prices are already causing demand destruction,” said Ole Sloth Hansen, head of commodities research at Saxo Bank A/S. 

Meanwhile, the European Union is set to propose a ban on Russian imports by the end of the year, with restrictions on shipments introduced gradually until then. While Germany said it could end its dependence on Russia by summer, Hungary signaled it would veto any sanctions on Russian energy.