(Bloomberg) -- Oil fell as traders tracked a worsening Covid-19 outbreak in China and prospects for additional crude releases from government stockpiles.
West Texas Intermediate dropped below $99 a barrel in early Asian trade after sinking 13% last week. China is grappling with a renewed coronavirus outbreak that is harming crude demand. Shanghai’s 25 million residents are almost all under some form of lockdown as the country added more than 13,000 daily infections, with state media reporting a case infected with a new subtype.
The U.S. oil benchmark tumbled last week after Biden administration announced a massive release of crude from strategic reserves to combat prices that have been buoyed by the war in Ukraine. Japan and the U.K. will also tap stockpiles, while New Zealand may participate too. After the U.S. move, Goldman Sachs Group Inc (NYSE:GS). pared price forecasts while remaining broadly bullish on oil’s outlook.
Traders were also tracking stop-start talks to restore a 2015 nuclear accord with Iran after Tehran said that it’s close to reaching an agreement with the U.S. If concluded, a pact may boost official Iranian crude exports.
Although prices have eased, leading players remain wary. Vitol Group, the biggest independent crude trader, warned at the weekend that prices had fallen to levels that didn’t reflect risks including disruptions to Russian exports.
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