London/Beijing - Worries about interest rate hikes to control rampant inflation and hopes of a pick-up in Chinese demand remains sceptic amidst a rise in COVID-19 cases has send the price of Oil dropping to more than $2 on Monday.
Beijing's most populous district Chaoyang announced three rounds of mass testing to quell a "ferocious" COVID-19 outbreak.
China has stuck to its “zero-COVID” policy requiring mass testing, quarantines and the sequestering of anyone who has come into contact with an infected person in concentrated locations where hygiene is generally poor.
A total of 166 cases have been linked to the Heaven Supermarket club in the downtown Gongti nightlife area after an infected person visited there Thursday. Of those, 145 were customers, while the rest were staff or people with whom customers had later contact.
The entire area, along with the adjacent Sanlitun shopping and dining complex, was shut down until further notice.
The outbreak prompted authorities in the sprawling Chaoyang district to put school back online, with the exception of students taking middle and high school placement exams. Sports gatherings in the city have also been put on hold.
Oil has surged in 2022 as Russia's invasion of Ukraine compounded supply concerns and as oil demand recovered from COVID lockdowns. Brent hit $139, the highest since 2008, in March, and both oil benchmarks rose more than 1% last week.
Supply remains tight, with OPEC and its allies unable to deliver in full on pledged output increases because of a lack of capacity in many producers, sanctions on Russia, and output in Libya roughly halved by unrest read more .
"The supply/demand dynamics remain supportive of prices," said Jeffery Halley of brokerage OANDA, who sees an extended oil sell-off as unlikely "unless U.S. markets move to price in a full-blown recession."
Equities fell in Asia and made early losses in Europe as Friday's data showing the U.S. consumer price index rose 8.6% last month continued to weigh on financial markets.
The data put markets on alert that the Federal Reserve may tighten policy for too long and cause a sharp economic slowdown. The next Fed policy decision is on Wednesday.
-Reuters/Ap