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Oil falls below 100 dollars after the rise in coronavirus infections in China | markets

The price of a barrel of Brent oil fell below $100 this Monday and sank to $97.5, doubled by the increase in COVID-19 infections in China. The Asian giant, which is the largest importer of crude oil in the world, has implemented new restrictions on mobility in its main cities, a measure that seeks to mitigate the spread of the virus but that will impact fuel demand.

The city of Shanghai has reported a record over 26,000 new coronavirus cases on Sunday, while the southern metropolis of Guangzhou is implementing a series of restrictions to stop the spread of the highly infectious omicron variant. Oil analysts continue to cut their demand forecasts as the outbreak curbs travel.

The European Union executive, meanwhile, is drafting proposals for a possible EU oil embargo on Russia, the foreign ministers of Ireland, Lithuania and the Netherlands said on Monday, though there is still no agreement to ban Russian crude. Likewise, heMember countries of the International Energy Agency (IEA) will release 60 million barrels over the next six months, and the United States will match that as part of its 180 million barrel release announced in March.

Bank of America has kept its forecast for Brent crude at an average of $102 a barrel for 2022 and 2023, but lowered its summer price peak to $120. For its part, the Swiss investment bank UBS also lowered its forecast for June to 115 dollars per barrel.

Oil has now lost most of the gains seen since the start of the Russian invasion of Ukraine in late February. Falls in futures prices in recent days have pointed to easing concerns about supply shortages and, so far, there are no signs that Russia’s crude exports are beginning to unravel.

In this context, the price of Brent futures has also sunk below 100 dollars. Contracts for June are around 98 dollars, while in August and September they are around 97 and 96 dollars per barrel, respectively. However, the price would not approach the 90 until 2023, according to information from the Intercontinental Exchange.

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