(New York) Oil prices retreated on Monday as the market worried about the closure of factories in China in an attempt to contain the spread of the coronavirus, which could slow activity in the world’s second-largest economy.
The price of a barrel of North Sea Brent for February delivery, the most traded contract in London, fell 1.01% to $ 74.39.
In New York, the price of a barrel of West Texas Intermediate (WTI) for the month of January dropped 0.53% to 71.29 dollars.
“The market was in a positive mood at the start of the day, but reports of plant closures in eastern China put downward pressure” on prices, said Robert Yawger, head of futures contracts on energy at Mizuho Securities.
Authorities in Zhejiang province, located immediately south of Shanghai along the east coast, on Monday reported dozens of new cases of coronavirus since early December, a priori linked to the Delta variant.
At the same time, in the northeast of the country, the authorities in Tianjin City announced that they had identified the Omicron variant in a person returning from abroad. This is the first known case in China.
These news from the Asian giant have tempered the recent optimism of the markets which counted on a limited impact of Omicron on the world economy, especially as in the United Kingdom, already under the blow of the restrictions, the Prime Minister Boris Johnson announced the death of a person with the new variant on Monday.
For Robert Yawger, the slowdown in the price of black gold is also due to the fact that they encountered technical thresholds without managing to settle higher, in particular that of 73 dollars for the WTI.
Operators expect a further decline in commercial crude reserves in the United States, but an increase in stocks of refined products, gasoline, kerosene, diesel or fuel oil, which worries the market. “Demand is really low,” especially as winter approaches, notes Robert Yawger.
This sluggish demand has been attributed in part to a mild fall in the United States for fuel oil, but the holiday season, between Thanksgiving and the holiday season, has traditionally been marked in the United States by a increased consumption of gasoline and kerosene.