HomeIndustriesOil Rally Fizzles Out as Chinese Economic Concerns Linger

Oil Rally Fizzles Out as Chinese Economic Concerns Linger

Oil’s post-OPEC+ meeting rally came to an end on Tuesday as investors’ concerns over Chinese factory lockdowns take center stage. Global benchmark Brent slumped below $94 per barrel; a sharp turnaround from Monday’s 3% gain when OPEC+ agreed to decrease production by 100,000 barrels per day.

As coronavirus-induced lockdowns in factories across China have risen, so too have concerns of a production slowdown that could offset the intended effects of the G-7 nations to cap the price of Russian oil exports.

“Fundamentally we’re probably moving in the right direction in terms of calming the oil market, but all of that friction out there related to Russia seems like it’s only going in one direction,” Jeff Brown, president of consultant FGE, claimed. According to Brown, OPEC+ is looking to maintain high prices as production seems to have reached its limit.

Saudi Arabia, a member of OPEC+, stated that while the group is willing to provide additional support should the oil market need it, crude is closing in on the lower end of its trading range. The latest OPEC+ meeting saw the group’s first supply cut in over a year.

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