Oil prices will erase 2022 gains as Chinese protests create demand stress

Nov 28 (Reuters) – Oil prices are near their lowest this year as street protests against strict COVID-19 restrictions in China, the world’s biggest crude importer, dampen demand.

Brent crude was down $2.67, or 3.1 percent, to trade at $80.96 a barrel by 1330 GMT, having earlier plunged more than 3% to $80.61 in the session since Jan. 4.

U.S. West Texas Intermediate (WTI) crude fell $2.09, or 2.7%, to $74.19, its lowest since Dec. 22 last year at $73.60.

Both benchmarks, which hit 10-month lows last week, have posted three straight weekly declines.

Hiroyuki Kikukawa, research manager at Nissan, said: “Political uncertainty led to the sell-off, with rare protests in Shanghai against the government’s strict COVID-19 restrictions, as concerns about weak oil demand in China grew amid rising cases of COVID-19.” Guarantees.

Markets looked volatile ahead of this weekend’s OPEC+ meeting and G7 oil prices rallied.

While much of the world has lifted many restrictions, China has stuck to President Xi Jinping’s zero-covid policy.

Hundreds of protesters and police protested for a third day in Shanghai on Sunday night and spread to several cities.

The Organization of the Petroleum Exporting Countries (OPEC) and a group known as OPEC+, including Russia, will meet on December 4. In October, OPEC+ agreed to cut its production plan by 2 million barrels per day until 2023.

Meanwhile, diplomats from the Group of Seven (G7) and the European Union have been discussing an increase in the price of Russian oil between $65 and $70 per barrel, with the aim of supporting revenue without disrupting the global oil market due to Moscow’s military offensive in Ukraine.

However, EU governments are divided over the extent to which Russia will cut oil prices, which could have an impact.

Craig Erlam, senior market analyst at OANDA, said: “Talks will continue on price revisions but not as tightly as originally suggested.

“The risk of a $70 cap for Russia is very small as it is already trading at those levels.”

The price ceiling will take effect on December 5, when the European Union’s ban on Russian crude goes into effect.

Reporting by Noah BrowningAdditional reporting by Yuka Obayashi in Tokyo and Mohi Narayan in New Delhi Editing by Kirsten Donovan and David Goodman

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