Oil futures fell early Tuesday, pulling back from their highs of the month as investors weigh a Libyan supply outage and China’s COVID lockdowns.
Price action
- West Texas Intermediate crude for May delivery CL00, -2.68% CL.1, -2.17% CLK22, -2.17% fell $1.31, or 1.2%, to $106.90 a barrel on the New York Mercantile Exchange.
- June Brent crude BRN00, -2.12% BRNM22, -2.12%, the global benchmark, dropped $1.32, or 1.2%, to $111.84 a barrel on ICE Futures Europe. Front-month contracts for both WTI and Brent ended Monday at their highest for April.
Market drivers
Oil was lifted Monday as news reports said two Libyan ports had halted oil loadings as a result of a shutdown of the Sharara oil field, the nation’s largest. The move, came amid heightened worries over supply as a result of Russia’s invasion of Ukraine, with European countries weighing plans for an eventual phaseout of Russian energy imports.
COVID-19 lockdowns in China, meanwhile, have held the market back.
“Clearly, the regional lockdowns that we are seeing have lasted longer than many were anticipating, and so this will have a bigger impact on oil demand in the short term. This weaker demand helps to reduce the tightness that we are currently seeing in the market,” said Warren Patterson, head of commodities strategy at ING, in a note.
Ukraine said Russia has began a new phase of its invasion by launching a full-scale ground offensive to take control of the country’s industrial heartland, the Donbas. The focused attack on the eastern Ukraine region was expected when Russian forces withdrew from the area around the capital Kyiv after being stopped by Ukrainian forces.
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