Oil prices are declining Monday morning after a sharp decline over the past week caused by concerns about the Chinese economy.
The cost of January futures for Brent at London’s ICE Futures Exchange stood at $86.65 a barrel by 7:06 a.m., down $0.97 (1.11%) from the close of the previous session. Those contracts fell by $2.16 (2.4%) to $87.62 per barrel at the close of trading last Friday.
The price of WTI futures for January at the electronic trading on the New York Mercantile Exchange (NYMEX) is $79.34 per barrel by that time, down $0.77 (0.96%) from the previous session. The contract fell by $1.56 (1.9%) to $80.08 per barrel at the end of last session.
Brent dropped 8.7 percent and WTI dropped 10 percent at the end of last week. Both contracts finished the trading at their lowest since the end of September.
The main negative factor for oil quotations last week was the concerns about demand for fuel, especially in China.
China’s State Council warned of the risks of “irresponsible weakening” of countermeasures against the coronavirus, the South China Morning Post reported. In the past two weeks, the number of new cases of COVID-19 infection recorded daily in China has increased sevenfold, the WSJ wrote.
Traders are also trying to estimate how much crude will leave the market after the European embargo on Russian oil went into effect Dec. 5.
“No doubt the market will keep an eye on oil supply data from OPEC+ countries in the coming weeks, as it remains unclear how much production will actually decline after the announced 2 million bpd cut,” wrote Barbara Lambrecht of Commerzbank.
Meanwhile, the number of active oil rigs in the USA last week increased by 1 unit to 623, oil services company Baker Hughes reported. The index rose for the third week in a row.
