Oil declines at start of week as slowdown hangs over market

OIL fell as lingering concerns about an economic slowdown overshadowed signs of a tightening market.

West Texas Intermediate futures dropped to near US$104 a barrel after last week posting a loss in volatile trading.

Concerns that the US economy may tip into a recession are hanging over the market as the central bank raises rates to combat inflation. China is also facing the prospect of more virus restrictions as Covid-19 outbreaks continue to flare.

Oil dipped below US$100 a barrel last week before rebounding as the market was whipsawed by competing supply and demand outlooks.

US President Joe Biden is scheduled to visit Saudi Arabia this week during tour of the Middle East as he seeks to tame rising energy prices that are weighing on the economy.

There are some signs of relief for Biden. Gasoline prices have fallen for 26 days - including the single biggest daily drop in more than a decade. It is the longest streak of declines since April 2020. Motor fuel prices are a major contributor to inflation and a central issue in US elections.

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Shanghai reported its first case of the BA.5 sub-variant on Sunday (Jul 10) , warning of “very high” risks as the city’s rising Covid outbreak sparks fears of a return to its earlier lockdown. The case was discovered Friday, Zhao Dandan, vice head of Shanghai’s health commission, said at a press conference. BLOOMBERG