Expectations of additional lockdown measures in Shanghai to curb the spread of Covid-19 have had a stronger impact on oil prices than the strong fuel demand in the US, sending oil prices down by approximately a dollar from its highest level in three months, writes Reuters.

A barrel of European benchmark crude Brent costs USD 122.28 Friday morning against USD 123.52 Thursday afternoon. US counterpart West Texas Intermediate trades concurrently at USD 120.93 against USD 121.78 Thursday afternoon.

Despite the dip, oil prices are nevertheless in line for another weekly gain for the fourth and seventh week in a row for Brent and WTI, respectively. These gains seem to be coming to an end in the wake of additional pandemic restrictions in Shanghai.

”Losses were capped by expectations that tight global supply will continue with solid US demand for fuels and slow increase in crude output by OPEC+,” says Fujutomi Securities chief analyst Kazuhiko Saito to Reuters.

To counteract the slow increase in output by OPEC+, the US has worked together with several other nations on releasing crude from strategic oil reserves. The move has only had a limited effect, though.

English edit: Christoffer Østergaard

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