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Oil Slides on China COVID-19 Curbs, Strengthening U.S. Dollar

Oil Slides on China COVID-19 Curbs, Strengthening U.S. Dollar

Oil prices fell nearly 2% on Monday, extending last week’s steep losses on the back of a rising U.S. dollar and concerns that new pandemic curbs in Asia, especially China, may set back the global recovery in fuel demand.

Brent crude futures slid by $1.27, or 1.8%, to $69.43 a barrel by 0434 GMT, after having slumped 6% last week, their biggest weekly loss in four months.

U.S. West Texas Intermediate (WTI) crude futures fell $1.29, or 1.9%, to $66.99 a barrel, after having slumped nearly 7% last week in their steepest weekly decline in nine months.

“Concerns about potential global oil demand erosion have resurfaced with the acceleration of the Delta variant infection rate,” RBC analyst Gordon Ramsay said in a note.

ANZ analysts pointed to new restrictions in China, the world’s second-largest oil consumer, as a major factor clouding the outlook for demand growth.

The curbs include flight cancellations, warnings by 46 cities against travel, and limits on public transport and taxi services in 144 of the worst-hit areas.

On Monday, China reported 125 new COVID-19 cases, up from 96 a day earlier. In Malaysia and Thailand, infections continue to hit daily records of more than 20,000.

“While the number of cases (in China) is low, it comes just as the summer travel season peaks,” ANZ commodity analysts said in a note. “This has overshadowed signs of strong demand elsewhere.”

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