U.S. oil futures finished higher on Monday, recovering from early losses that saw the West Texas Intermediate contract briefly erase their year-to-date gain.
Protests over China’s strict COVID-19 restrictions stoked worries over slack crude demand from one of the world’s biggest consumers briefly pulled prices to their lowest level of the year.
West Texas Intermediate crude for January delivery
fell 96 cents, or 1.3%, to settle at $77.24 a barrel on the New York Mercantile Exchange. Prices for the front-month contract traded as low as $73.60, the lowest since Dec. 27, 2021, according to Dow Jones Market Data.
January Brent crude
the global benchmark, lost 44 cents, or 0.5%, to settle at $83.19 a barrel on ICE Futures Europe. It traded as low as $80.61, the lowest intraday level for a front month since Jan. 10. February Brent
the most actively traded contract, rose 18 cents, or 0.2%, to $83.89 a barrel.
rose 0.1% to $2.3306 a gallon
December heating oil
fell 0.7% to $3.2154 a gallon.
December natural gas
was down 4.4% to end at $6.712 per million British thermal units on the contract’s expiration day.
Oil had a rough few days over the Thanksgiving holiday, which appeared to be due to a “combination of low volumes, thin trading and concerns over demand declining again due to Chinese lockdowns,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
With U.S. traders returning, WTI crude regained the key $75 level — a level that has been defended by OPEC+, he told MarketWatch, pointing out that the group’s 2 million barrel cut in oil production, which began in November, was announced when prices were around this level.
Protests spread over the weekend in Beijing, Shanghai and other major Chinese cities over President Xi Jinping’s strict COVID-19 curbs. The protests follow complaints that policies aimed at eradicating the coronavirus by isolating every case might have worsened the death toll in an apartment fire in Urumqi in the northwestern Xinjiang region.
Lockdowns and other COVID restrictions were seen helping to keep a lid on crude prices in 2022. Oil surged to trade near 14-year highs following Russia’s February invasion of Ukraine, with the U.S. benchmark settling as high as $123.20 a barrel on March 8, while Brent saw a peak of $127.98 a barrel the same day.
See: China quietly eases some COVID rules after protests, but wider strategy remains
“Crude oil was the biggest casualty of the events unfolding in China, which are weighing on the demand outlook. Investors are worried that authorities will clamp down hard against protesters and tighten restrictions even more amid record high daily infections,” said Raffi Boyadjian, lead analyst at XM, in a note.
Still, Ipek Ozkardeskaya, senior analyst at Swissquote Bank pointed out that “one factor that could slow down bleeding in oil” is the upcoming OPEC meeting, scheduled for December 4.
The Organization of the Petroleum Exporting Countries could “use the Chinese excuse to further restrict outlook and hope to throw a floor under the crude selloff.”
Read: U.S. oil taps its lowest price of the year thanks to China as OPEC+ output decision looms
—The Associated Press contributed to this article.