Oil prices decline amid protests in China

Monday began with a sharp drop in the oil market amid a general decline in investor appetite for risk caused by news of protests against covid restrictions taking place in China.

Last week's trading ended with Brent rising to $86.90 per barrel. The current quote of the asset is $81.05 per barrel. North American WTI crude oil fell to $73.80 after rising to $79.90 last Friday. 

According to the latest news, mass protests were held in many cities of China, including the capital, against the restrictive measures imposed by the Chinese authorities due to COVID-19. The country has a «zero tolerance» policy for the coronavirus, which includes strict travel bans, lockdowns and strict quarantine for anyone who has had any contact with infected people. 

The wave of protests in China contributes to the strengthening of the US dollar, which, in turn, reduces the attractiveness of investments in raw materials. In addition, there is a high probability of further significant tightening of restrictions by the Chinese authorities, which will again worsen the prospects for the oil market and demand. 

At the moment, the demand for oil in China in the fourth quarter will decrease to 15.11 million barrels per day compared to 15.82 million b/d a year earlier.

In addition to the situation in China, the negotiations of European countries on the introduction of a ceiling on prices for Russian oil continue to have an impact on the oil market. Analysts believe that if a low price limit is set (below $65-70 per barrel) and supplies from the Russian Federation are suspended, the oil market may receive an upward impulse.