Oil sinks as China’s covid resurgence overshadows tight market

Oil sinks as China’s covid resurgence overshadows tight market

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An oil pumping jack, also known as a "nodding donkey", in an oilfield near Dyurtyuli, in the Republic of Bashkortostan, Russia, on Thursday 19 November 2020. Photographer: Andrey Rudakov/Bloomberg





Oil declined as the prospect of more demand-sapping virus restrictions in China overshadowed signs of a tightening market.

West Texas Intermediate dropped near $103 a barrel after posting a loss last week in volatile trading. Virus cases continued to climb in Shanghai and other regions, with new sub-variants providing a challenge to the country’s Covid Zero strategy. Concerns that the US may tip into a recession are also hanging over the market as the central bank raises rates to combat inflation.

“Covid numbers are ticking up again,” said Stephen Innes, managing partner at SPI Asset Management. “Although the possible demand impact of a recession continues to weigh on sentiment, the prevailing view, at least for now, is that the longer-term structural issues facing the oil market will support prices.”

Oil dipped below $100 a barrel last week before rebounding as the market was whipsawed by competing supply and demand outlooks. US President Joe Biden is scheduled to visit Saudi Arabia this week during a tour of the Middle East as