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Oil prices fell more than $ 5 a barrel on Monday as concerns over a drop in fuel demand in China escalated after the country’s financial center, Shanghai, said it would implement a two-phase shutdown to curb the rise in corona virus cases.
Brent crude futures fell to $ 115.32, or $ 5.15 or 4.3 percent at $ 115.50 at 0731 GMT.
US West Texas Intermediate crude was at $ 108.28, $ 5.30, or 4.7 percent lower at $ 108.60 a barrel.
Both contracts rose 1.4 percent on Friday, signaling a three-week first-week increase, with Brent rising more than 11.5 percent and West Texas Intermediate rising more than 8.8 percent.
“The closure of Shanghai has led to new sales from investors.
“We expect the oil market to rebound later this week as it is unlikely that OPEC + will increase oil production at a faster pace than it has in recent months,” he said.
On Sunday, the Shanghai city government said all businesses and factories would be closed or employees working remotely as part of a two-phase strike in nine days after the city set a new record for asymptomatic cases.
Public transportation, including transportation services, will be shut down and fuel demand will be reduced.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies known as OPEC + are due to meet on Thursday.
OPEC + has so far resisted calls from major consumer countries, including the United States, to increase production. OPEC + has been increasing production by 400,000 barrels each month since August to mitigate the impact of cuts made when the Govt epidemic hit demand.
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