By Adedapo Adesanya
Oil prices edged lower on Monday over strict COVID-19 restrictions in China, the world’s top crude importer, with Brent crude futures losing 36 cents to trade at $98.21 a barrel, as the United States West Texas Intermediate crude dropped 36 cents to $92.25 a barrel.
Prices rose earlier in the session on news that Chinese leaders were considering reopening the economy from strict COVID-19 restrictions but were proceeding slowly and had set no timeline.
Chinese government officials then signalled the government had no intention of changing its approach to Covid containment, which meant large-scale lockdowns would continue in case of infection flare-ups, affecting demand for crude.
Last week, unverified reports on social media said there were signals the world’s largest oil importer may reconsider its strict approach to COVID-19, and that boosted oil prices for a short while, but in the absence of official confirmation of the news, the boost was short-lived.
The country’s strict COVID containment approach is still able to control the virus, despite the high transmissibility of COVID variants and asymptomatic carriers, according to China’s National Health Commission.
China’s zero-COVID policy includes lockdowns, quarantining and rigorous testing aimed at stopping the spread of the coronavirus.
Meanwhile, China’s imports and exports contracted unexpectedly in October, but its crude oil imports rebounded to the highest level since May.
Exports fell by 0.3 per cent in October on an annual basis, missing analyst expectations, which were for an increase of 4.3 per cent.
Imports also fell, the data showed, by 0.7 per cent, versus expectations for moderate growth of 0.1 per cent. Out of this, crude oil imports in October rebounded to the highest level since May, up 14 per cent from a low base a year earlier in their first annual growth in five months, data showed on Monday.
It brought in 43.14 million tonnes of crude oil last month, equivalent to 10.16 million barrels per day.
Adding some price support, the US Dollar sank against the Euro on Monday, while the Pound Sterling was supported by risk-on sentiment. A weakening dollar makes greenback-denominated oil less expensive for other currency holders, helping push prices higher.
Oil prices have also been underpinned by expectations of tighter supplies when the European Union’s embargo on Russia’s seaborne crude exports starts on December 5.
Dipo Olowookere