- Oil prices dipped amid fears that the Covid-19 outbreak in China might dampen global demand
- WTI futures fell nearly 5% to $97.40., reaching its lowest level in nearly two weeks
- Shanghai promises to enforce Covid-19 limitations more strictly, which is estimated to result in a decrease in fuel use of about 20% in April
- That’s equal to a 1.2 million-barrel-per-day decline in crude oil consumption, the biggest drop since the Wuhan lockdowns
- Russia has increased oil supplies to major users in recent weeks, defying its reputation as a global energy outcast
- Oil exports have risen to an average of 1.6 million barrels a day so far in April, according to TankerTrackers.com
- Russian crude oil production has decreased by around 7% since March, but the reported “self-sanctioning” has not shown up in satellite tracking data that tracks exports (OilX)
- European governments have discussed imposing an oil embargo but have yet to take action
- The threat of increasing interest rates in the United States also weighed on oil prices
- The Federal Reserve's chair has hinted that the central bank may boost short-term interest rates by twice as much as usual at upcoming meetings, beginning in two weeks
- The Fed has already raised its key overnight rate once, the first such increase since 2018, and further increases are expected
- AEGIS notes that a hawkish fed has traditionally resulted in a stronger US dollar, which is bearish for dollar-denominated commodities as fewer units of currency are required to purchase the same amount of goods