(Bloomberg) — Oil was flat amid signs that the ongoing coronavirus shutdown in China is weighing on the economy, contradicting positive news that protests are halting supplies from Libya.
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West Texas Intermediate traded just under $107 a barrel after rising last week by the most since early March. China recorded the biggest drop in consumer spending and the worst unemployment rate since the early months of the epidemic, while Shanghai reported its first deaths from the ongoing virus outbreak.
Supplies are taking a hit as Libya faces further interruptions in deliveries after demonstrations against the government of Prime Minister Abdel Hamid Dabaiba on Monday shut down the El Sharara field, the country’s largest oil field. Protesters earlier forced two Libyan ports to halt loading and halt production at El Feel.
Oil has risen this year as the war in Ukraine disrupts an already tight market, with some traders shunning Russian crude. The surge prompted the United States and its allies to announce the release of millions of barrels of strategic reserves to quell inflationary pressures. OPEC and its partners have refused to raise the pace at which they are restoring production halted during the pandemic.
Russian Deputy Prime Minister Alexander Novak said last week that if more countries ban Russian energy flows, prices could “exceed” their historical highs. The US and UK moved to ban crude oil from the country after Moscow’s invasion of Ukraine, and there is pressure on the European Union to follow.
“The market is still deciding how much Russian oil might be kicked out of the market,” said Matt Stanley, a trader and broker at Star Fuels in Dubai. “This keeps Brent at around $110 a barrel.”
In a phone call over the weekend, Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman gave a “positive assessment” of their efforts to stabilize the oil market, indicating that a change in production policy is unlikely. The two countries are led by the alliance that includes the Organization of the Petroleum Exporting Countries and its partners, known as OPEC+.
Crude oil markets are lagging, a bullish pattern characterized by near-term prices above long-term ones. Brent’s spot spread – the gap between the two closest contracts – was more than $1.10 a barrel down, up from last week.
The rise in oil prices this year was part of a broader advance in energy commodities, as prices saw their gains extend even as the outlook for global economic growth dwindled. On Monday, US natural gas prices hit their highest level in more than 13 years as strong demand tests the ability of rigs to expand supplies.
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