Oil Up as China Fuel Demand Concerns Mount
Oil was up on Tuesday morning in Asia opening higher after falling sharply during the prior session. However, fuel demand concerns as more COVID-19 lockdowns could be possible in China and a U.S. dollar near a two-year high remained on investors’ radars.
Brent oil futures rose 1.21% to $103.40 by 11:54 PM ET (3:54 AM GMT) and WTI futures were up 0.97% to $99.50. Both Brent and WTI benchmarks ended the previous session down around 4%, with Brent tumbling as much as $7 a barrel during the session and WTI falling roughly $6 a barrel.
COVID-19 lockdowns in the city of Shanghai entered a fourth week. Meanwhile, orders for mass testing in certain parts of Bejing, including its largest shopping district, have prompted fears of a lockdown there and drove fuel demand fears. China is the world’s second-largest fuel importer.
"The hit from Chinese lockdowns is over a million barrels a day and the testing of 12 districts over the next five days will determine the next major move for crude prices," OANDA senior market analyst Edward Moya said in a note.
Meanwhile, the dollar was down on Monday but near a two-year high, thus rendering oil more expensive for other currency holders.
"Supply fears are not the primary focus for energy traders, and now you have a surging dollar that is adding extra pressure across all commodities," OANDA's Moya said in his note.
Investors now await U.S. crude oil supply data from the American Petroleum Institute, due later in the day.