Crude oil prices slip on rising coronavirus cases in China

Crude oil prices dropped in early Asian trade on Thursday after rising modestly on Wednesday due to ongoing concerns about tight worldwide supply, underscored by another drawdown in U.S. distillate and gasoline inventories.

The significant drop in crude oil prices has been witnessed as rising concerns of coronavirus cases in China, the biggest importer of crude oil in the world, weighted on future markets.

The prices rose earlier on Tuesday too when China's central bank said that it will step up cautious monetary policy to support the economy which would eventually boost oil demand.

The market weighed China's plans to support its economy against a possible coronavirus lockdown in its capital Beijing.

The country’s central bank said that it will step up cautious monetary policy to support the economy which would eventually boost oil demand.

The oil traders across the globe are focusing on more stimulus coming from China, keeping aside the fears of Beijing lockdown.

Also Read: Crude oil surges to 14-year highs on delays in Iranian talks

On Wednesday, Brent Crude oil settled at US$105.32/bbl, up 33 cents, and WTI crude oil settled at US$102.02/bbl, up 32 cents%.

Source: Refinitiv Eikon

On Thursday, July delivery Brent Crude oil futures further rose and last traded at US$103.95 per barrel down 0.95%, while June delivery WTI crude oil futures exchanged hands at US$101.12 per barrel, down 0.88% at 12:09 PM AEST.

Rising COVID-19 cases in China

As per the state broadcaster CCTV reported on Thursday, Beijing reported 48 new symptomatic and 2 new asymptomatic COVID-19 cases on 27 April.

A day earlier, the city recorded 31 symptomatic cases and three asymptomatic ones, as it began a mass testing program aimed at containing a new outbreak.

Hangzhou city of China is also expected to conduct a mass COVID testing drive from April 28, state media reported on Wednesday.

Additionally, the U.S. Energy Information Administration (EIA) stated crude stocks rose by just 692,000 barrels last week, while distillate inventories fell to their lowest since May 2008.

Moreover, Russia-based Gazprom warned Poland’s PGNiG to halt gas supplies along the Yamal pipeline from Wednesday morning. The country is demanding payment in Rubles from Poland which is likely to result in a halt in gas supplies.

Energy markets across the globe are dealing with massive disruptions to supply following Russia's invasion of Ukraine and subsequent sanctions slapped on Moscow by the United States and its allies.

Also Read: Crude oil slides from multi-year highs as Iran talks rev up

Bottom Line

Crude oil prices tumbled on Thursday after gaining modestly on Wednesday. The rising concerns of coronavirus cases in China weighted on future markets.

Here’s how commodities performed in the last week click here