Price drops on oil exchanges

Oil in the USA cheaper than for the first time since 4 sessions in response to poor macro data from China. Lockdowns introduced in this country due to the Covid-19 epidemic hit the economy of this world's largest oil importer, say brokers.

West Texas Intermediate oil barrel in deliveries for June costs US$108.32 at NYMEX in New York, lower by 1.96 percent.

The oil Brent on ICE in London in deliveries for July is valued at $109.19 per barrel, down by 2.12%.

Data published on Monday show that the production of industry in China decreased by 2.9% in April on the basis of growth by 5.0% and forecasts of analysts +0.5%.

In turn, retail sales in China decreased by 11.1% in April after the fall by 3.5%. Here analysts predicted a drop of 6.6% rdr.

The spending of Chinese consumers declined in April to the lowest level from the beginning of the Covid-19 pandemic.

There was also a demand for oil – in April the demand for this raw material in China fell by 6.7 percent rdr to 12.09 million barrels a day.

Meanwhile, the unemployment rate in IV increased to 6.1% from 5.8% in III and compared to the 6% forecast.

China's data is terrible, which will make oil markets run +oil bears+. Low liquidity also increases price fluctuations in the fuel market.

Stephne Innes, managing partner of SPI Asset Management Pte

China is currently struggling with the strongest wave of the Covid-19 epidemic for over two years.

While most of the world's countries have alleviated restrictions upon the vaccination of a significant proportion of the population, the Chinese authorities are sticking to the zero covid strategy and are seeking complete virus elimination.

Since the beginning of April, there has been a 25-million-dollar Shanghai in a crude lock house, recognized as China's richest city. However, the situation is beginning to improve slowly and it is possible that the authorities will begin to mitigate the harshest elements in this city for six weeks.

For now, about 980,000 Shanghai residents, with 25 million inhabitants of this city, remain in the "most strict" lockdown and cannot leave their homes.

"Normal Life" and production of Shanghai industry are expected to resume from mid to late June," announced the deputy mayor of this town of Zong Mingn on Monday.

From Monday, the city's authorities are to gradually allow taxis and private cars in certain areas, and railway and bus connections are to be resumed from 22 May.

Source: PAP