Oil prices have risen beyond $113 per barrel on expectations that China’s lockdowns would expire soon and demand would not be harmed for long. The news that Shanghai was witnessing a robust recovery from COVID cases, with preparations in place to lift lockdown restrictions beginning this week, overcame a slew of adverse news for oil in the markets on Monday.
At 6:38 p.m. Nigerian time, Brent was trading at $113.6 per barrel, while WTI was at $113.5
After nearly six weeks of lockdowns that have shook the Chinese economy and crippled global supply networks, authorities in Shanghai announced on Monday that restrictions would be gradually eased. Lockdowns in Shanghai are set to cease on June 1st, with a gradual easing beginning on May 21st.
On Monday, the Guardian quoted deputy mayor Zong Ming saying “From June 1 to mid- and late June, as long as risks of a rebound in infections are controlled, we will fully implement epidemic prevention and control, normalise management and fully restore normal production and life in the city.”
The announcement comes as oil prices have been under pressure due to additional disclosures of weak Chinese economic data and indications that the European Union’s attempts to embargo Russian oil have stalled.
China released official economic data on Monday that revealed a dramatic downturn, with industrial output falling by about 3% year on year in April and retail sales plunging by around 11%. According to DW, Shanghai’s port traffic was also down by 40%. All of this has resulted in a drop in Chinese demand for oil.