Oil prices declined more than $2 per barrel for the second straight week as world consumers announced plans to release a record amount of crude oil and oil products from strategic stocks in addition to China’s continued lockdowns, Reuters reported.
Brent crude for June delivery fell $2.12, or 2.1%, to $100.66 a barrel by 0756 GMT, while U.S. West Texas Intermediate crude lost $2.21, or 2.3%, to $96.05.
China, which imports more oil than any other country, has kept Shanghai, a city of 26 million people, locked down because of its “zero tolerance” policy for COVID-19.
The decline in oil prices on the day was mainly due to concerns about China’s economic growth as well as China’s lockdown showing no signs of being lifted and Guangzhou’s plans to begin mass virus testing, said Jeffrey Halley, senior market analyst at OANDA.
It is becoming increasingly clear that China’s zero-COVID policy will not just negatively affect the industrial output but also domestic consumption if Omicron spreads to other cities, he added.
According to the International Energy Agency (IEA), 60 million barrels will be released over the next six months with the United States matching that amount as part of its 180 million barrel release announced in March. In response to its invasion of Ukraine, Russia has been slammed with heavy sanctions, resulting in a shortfall in its crude production.
In the United States, energy companies added oil and gas rigs last week for the third straight week as Washington wants to ramp up production to help its allies break away from their reliance on Russia’s oil and gas.
