Oil slides to 2-week lows as Shanghai lockdowns stoke demand concerns

A general view shows Lukoil company’s oil refinery in Volgograd, Russia April 22, 2022. REUTERS/REUTERS PHOTOGRAPHER

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  • Shanghai fences off COVID-hit areas, fueling fresh outcry
  • U.S. drillers add oil and gas rigs for week five -Baker Hughes
  • EU could hit Russia with ‘smart sanctions’ on oil imports – media

TOKYO, April 25 (Reuters) – Oil prices fell to around two-week lows on Monday, extending last week’s losses, as concerns grew that prolonged COVID-19 lockdowns in Shanghai and potential US rate hikes would hurt global economic growth and fuel demand.

Brent crude futures were down $3.93, or 3.7%, at $102.72 a barrel at 0644 GMT. They touched $102.47 earlier in the session, the lowest since April 12.

U.S. West Texas Intermediate (WTI) crude futures fell $3.80, or 3.7%, to $98.27 a barrel, after earlier skidding to $98.05, also the most low since April 12.

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Benchmarks lost almost 5% last week on demand concerns.

“Oil is repricing lower on lower consumption in China as the Federal Reserve raises interest rates to slow the US economy,” Stephen Innes, managing director of SPI Asset Management, said in a statement. a rating.

Shanghai authorities battling a COVID-19 outbreak have erected fences outside residential buildings, sparking fresh public outcry over a lockdown that has forced much of the city’s population of 25 million people in the interior.

US Federal Reserve Chairman Jerome Powell has indicated that a half-point interest rate hike “will be on the table” at the Fed’s meeting in May. Read more

On the supply side, U.S. energy companies added oil and gas rigs for a fifth consecutive week amid high prices and government incentives.

In Europe, the Russia-Kazakh consortium Caspian Pipeline resumed full exports from April 22 after nearly 30 days of disruption following repairs to one of its main loading facilities, three sources told Reuters on Friday. .

Some analysts said the worsening crisis in Ukraine could increase pressure on the EU to sanction Russian oil and prices could rise later this year.

“Oil prices are unlikely to fall below $90 a barrel due to the prospect of a possible EU ban on Russian oil amid a worsening Ukraine crisis,” said Hiroyuki Kikukawa, Managing Director of Research at Nissan Securities.

The EU is preparing “smart sanctions” against Russian oil imports, The Times reported on Monday, citing European Commission Executive Vice President Valdis Dombrovskis. Read more

Russia is Europe’s largest gas supplier and the world’s second largest oil exporter, after Saudi Arabia.

Emmanuel Macron’s victory in the French presidential election could also support oil prices, some analysts said. Read more

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Reporting by Yuka Obayashi; Editing by Himani Sarkar, Muralikumar Anantharaman and Bradley Perrett

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