©Reuters. FILE PHOTO: Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in Argentina’s Neuquen province, Jan. 21, 2019. REUTERS/Agustin Marcarian
By Emily Chow and Dmitry Zhdannikov
SINGAPORE/LONDON (Reuters) – Oil prices fell on Monday, exacerbating a multi-week decline as a weakening global economy offset supply woes due to the closure of a key pipeline supplying the United States and Russia’s threat of a production cut.
futures were down 38 cents, or 0.4%, to $75.72 a barrel at 09:00 GMT. US West Texas Intermediate crude cost $70.76 a barrel, down 26 cents or 0.3%.
Last week, Brent and WTI fell to their lowest levels since December 2021 amid concerns that a potential global recession will affect oil demand.
China, the world’s largest importer, continued to relax its strict zero-COVID policy, though streets in the capital Beijing remained quiet and many businesses remained closed over the weekend.
On Monday, queues formed at fever clinics in the cities of Beijing and Wuhan, where COVID first emerged three years ago.
Oil markets are likely to remain volatile in the near term amid uncertainty about the impact on Russian production of the EU ban, headlines about China’s COVID policies and central bank moves in the US and Europe. analysts in a note.
UBS said it believed Brent should recover above $100 a barrel in the coming months amid supply constraints and rising demand, while OPEC+ would keep supply tight.
On Sunday, Canada’s TC Energy (NYSE:) said it had not yet determined the cause of the Keystone oil pipeline leak in the United States last week. It gave no timeline on when the pipeline would be operational again.
The Keystone Line, with a capacity of 622,000 barrels per day, is a critical thoroughfare that ships heavy Canadian crude oil to US refineries.
Russian President Vladimir Putin said on Friday that Russia could cut production and refuse to sell oil to a country that imposes a “stupid” price cap on Russian exports.
The Saudi energy minister also said on Sunday that price cap measures have not yet produced a clear result.
“The emerging EU embargo on Russian crude oil… may carry moderate upside energy price risks in the coming months. But supply uncertainty should ease in spring 2023, after the embargo on oil products (on February 5) has been played out,” German Bank (ETR:) said in a note.