US oil dropped 5.6% to a two-week low of $ 96.33 a barrel Monday morning, while Brent, the world benchmark, fell 4.9% to $ 101.43 a barrel.
“The overriding sentiment today is bearish due to the China Covid lockdowns,” Andy Lipow, president of consulting firm Lipow Oil, wrote in an email Monday.
Chaoyang, one of the largest districts in China’s capital city Beijing, announced Sunday it will launch mass testing for people who live and work in the district.
“Rising cases and lockdowns appear to set increasingly crimp demand in one of the leading oil consumers in the world,” said Matt Smith, lead oil analyst, Americas, at analytics company Kpler.
While the focus now is on demand for oil, traders are on high alert for further disruptions to Russia’s oil supplies that could send prices moving higher again.