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Crude prices decline amid demand concerns from China

New Delhi: Crude oil prices declined around 3% on Monday on demand concerns as the Chinese city of Shanghai continues to remain under lockdown.

The resurgence in covid cases in China has dampened the global demand outlook. Further, anticipation of rate hike by the US Federal Reserve also weighed on the sentiments, experts said.

At 10.30 am, the June contract of Brent futures on the Intercontinental Exchange was at $103.41 per barrel, lower by 3.04% from its previous close. The June contract of West Texas Intermediate on the NYMEX fell 3.12% to $98.89 per barrel.

Ravindra Rao, head, Commodity Research at Kotak Securities said: “Crude trades lower weighed down by demand concerns amid increasing virus spread in China. Also weighing on price is expectations that Libyan supply may improve soon.”

He further said that European Union’s hesitance on banning Russian energy exports has also eased worries about major supply disruption. “Crude may remain under pressure on concerns about Chinese economy however a sharp fall may not materialise with supply risks looming large,” Rao added.

Further, last week, Federal Reserve Chair Jerome Powell indicated that the US central bank may soon hike interest rates by 50 basis points. This has raised concerns of a slowdown in growth which would eventually hit oil demand.

Retail fuel prices in India, meanwhile, have remained unchanged for the 19th day in a row, with the last price hike undertaken on 6 April. In the national capital, petrol costs 105.41 a litre, while diesel is selling for 96.67 a litre.

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