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Oil prices ease over renewed concerns of Covid restrictions in China

NEW DELHI : Crude oil prices gave up initial gains on Thursday as demand concerns returned as authorities in Shanghai, China started imposing new Covid-related restrictions fueling concerns of fall of demand. A two-month long lockdown in Shanghai had ended last week supported oil prices in the past few sessions. At 7.07 pm, the August contract of Brent futures on the Intercontinental Exchange was at $123.02, lower by 0.45% from its previous close.

Oil futures had however started the session in the green and the August contract of Brent touched a high of $124.34 per barrel. The July contract of West Texas Intermediate on NYMEX fell 0.83% to $121.10 a barrel. “NYMEX crude oil gave up early gains while base metals slipped as announcement of fresh lockdown measures in China reignited concerns of renewed restrictions and fears of a weaker economic recovery," said a Kotak Securities report.

Analysts expect market sentiments to weaken further as the European Central Bank (ECB) ended a long-running stimulus scheme on Thursday. ECB also indicated that it will announce its first interest rate hike since 2011 next month, followed by a potentially larger move in September if inflation does not cool down. Recent hike in interest rates globally have raised concerns of a growth slowdown, thereby denting demand hopes.


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