Oil prices fall below $100 a barrel as China’s COVID-19 outbreak threatens demand.
Oil prices fell below $100 a barrel on Tuesday as the world’s biggest oil importer China imposed new lockdowns amid an outbreak of Covid-19 cases that could threaten oil demand.
Global benchmark Brent crude fell 6.7 percent to $99.66 a barrel, its lowest price since late February. US benchmark West Texas Intermediate crude was down more than 6 per cent at $96.36 a barrel. In the past week, crude oil prices have fallen by more than 20 percent, reversing the massive jump that followed Russia’s invasion of Ukraine.
China’s sanctions could affect global supply chains that are still struggling to recover from the disruptions of the pandemic by slowing down major factory and transportation networks. The zero-tolerance approach to the COVID outbreak has led companies, including Taiwanese electronics firm Foxconn, which assembles Apple’s iPhones, to suspend operations in the country.
Any slowdown in the economy in China will reduce demand for oil, as well as affect gas prices.
Gas prices, which have been rising for weeks in the midst of conflict in Ukraine, fell slightly on Tuesday. According to AAA data, the average price for a gallon of regular gasoline was $4.316, down from a day’s high of $4.325.
The S&P 500 rose about 0.9 percent in early trading in the stock market, while Europe’s shares were slightly lower.
The Federal Reserve will begin a two-day meeting on Tuesday and is expected to announce on Wednesday that it will raise interest rates by a quarter point and again several times this year in efforts to calm inflation.
The yield on 10-year Treasury notes fell four basis points, or 0.04 percentage points, to 2.1 percent. In recent times, the yield has risen above 2 per cent for the first time since 2019.
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