Oil prices fell by over $1 a barrel on Tuesday as rising COVID-19 cases in China heightened fears of lower fuel consumption from the world’s top crude importer.
Brent crude futures were down $1.08, or 1.16%, to $92.06 a barrel at 1435 GMT, while U.S. West Texas Intermediate crude fell $1.13, or 1.32%, to $84.74.
Investors cheered China’s announcements last week that it would reduce the impact of a strict zero-COVID policy to spur economic activity and energy demand, but analysts said lockdowns and surging case numbers continue to be a key downside risk.
“Rising COVID cases in Beijing and in other cities served us with a reminder that a change in the trajectory of economic and oil demand growth in the world’s biggest oil importer is anything but imminent,” said Tamas Varga of oil broker PVM.
The country’s COVID cases rose further on Tuesday, including in the capital Beijing, and the country’s factory output growth slowed.
Investment bank JPMorgan on Tuesday cut its quarterly and full-year forecasts for economic growth in China because of the ongoing COVID restrictions.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) cut its 2022 global oil demand growth forecast for a fifth time since April, citing mounting economic challenges including high inflation and rising interest rates.
Both benchmarks saw some support throughout the session from supply concerns.
A European Union ban on seaborne Russian crude, set to start on Dec. 5, means that 1.1 million barrels per day (bpd) will need to be replaced, the International Energy Agency said on Tuesday.
The Agency has raised its forecast for oil demand this year.
Offering further support, U.S. stock index futures strengthened in the wake of cooler than expected inflation data released on Tuesday.
And U.S. crude oil stocks are expected to have dropped by about 300,000 barrels in the week to Nov. 11, a Reuters poll showed on Monday ahead of reports from the American Petroleum Institute due at 4:30 p.m. ET (2130 GMT) on Tuesday.