Oil slips on fears over slowing China demand

Brent crude fell 19 cents, or 0.2%, to $111.51 a barrel.

In Summary

•This is the highest since March 30 of $113.80.

•U.S. West Texas Intermediate was down 19 cents, or 0.2%, at $106.76.

A crude oil storage facility/
A crude oil storage facility/
Image: REUTERS

Oil edged lower on Monday as worries over slowing demand in China balanced support from concern over tight global supply and the deepening Ukraine crisis.

China's economy slowed in March as consumption, real estate and exports were hit, taking the shine off faster-than-expected first-quarter growth numbers and worsening an outlook already weakened by COVID-19 curbs and the Ukraine war.

Brent crude fell 19 cents, or 0.2%, to $111.51 a barrel at 0825 GMT, sliding from the highest since March 30 of $113.80 hit earlier in the session. U.S. West Texas Intermediate was down 19 cents, or 0.2%, at $106.76.

"Some Asian investors booked profits as they became worried about slowing demand in China," said Satoru Yoshida, a commodity analyst with Rakuten Securities.

Data on Monday also showed China refined 2% less oil in March than a year earlier, with throughput falling to the lowest since October as the surge in crude prices squeezed margins and tight lockdowns hurt demand.

Oil surged to the highest since 2008 in March, with Brent briefly topping $134, as Russia's invasion of Ukraine added to supply concerns due to sanctions on Russia and buyers avoiding Russian oil.

Adding to supply-side pressure, Libya's National Oil Corp on Monday declared force majeure at Zueitina oil port and warned that "a painful wave of closures" had begun hitting its facilities. Libya had halted production from its El Feel oilfield on Sunday.

Russian production declined by 7.5% in the first half of April from March, Interfax reported on Friday, and EU governments said last week the bloc's executive was drafting proposals to ban Russian crude.

Those comments came before tensions grew in the Ukraine crisis. Ukrainian authorities said missiles struck Lviv early on Monday and explosions rocked other cities as Russian forces kept up their bombardments after claiming near full control of the port of Mariupol.

"Continued war between Russia and Ukraine with no signs of a ceasefire fuelled supply fears, especially as demand is expected to pick up as driving season nears in the northern hemisphere," said Chiyoki Chen, chief analyst at Sunward Trading.

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