Anti-Xi-Jinping Protests Drag Down Oil, WTI Futures Fall To Lowest Level In Nearly A Year

Oil futures declined over $2 a barrel in Asian trading on Monday, with West Texas Intermediate (WTI) hitting its 11-month low mark weighed by protests in China over Xi Jinping’s harsh COVID-19 restrictions.

WTI crude futures fell to as low as $73.82, its lowest level since Dec. 27, while Brent futures touched $81.16 earlier in the session, its lowest since Jan. 11.

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Following a fire incident in northwestern Urumqi, protests have spread across Shanghai and Beijing against China's strict 'zero COVID' policies. Protesters chanted, "Xi Jinping step down, CCP step down," referring to the Chinese president and the ruling communist party.

The United States Brent Oil Fund BNO closed 0.39% lower on Friday while the Vanguard Energy Index Fund ETF VDE closed 0.16% lower.

Besides China, traders were also weighing a U.S. move to grant Chevron Corporation CVX a license to resume oil production in Venezuela, according to a Bloomberg report. This comes after sanctions stopped all drilling activities about three years ago. The sanctions relief follows Norwegian mediators announcing the restart of political talks between President Nicolas Maduro and the opposition this weekend, the report said.

Expert Take: Warren Patterson, head of commodities strategy at ING Groep NV in Singapore told Bloomberg, “Sentiment in the oil market remains negative, and developments over the weekend in China will certainly not help.”

Fenglei Shi, director of Greater China oil market midstream and downstream at S&P Global Commodity Insights said the “demand outlook will deteriorate before it gets better,” according to the report.

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