Oil falls, spooked by Beijing COVID warning and inflation concerns

Oil prices slid on Monday as a flare-up in COVID-19 cases in Beijing quelled hopes for a rapid pick-up in China’s fuel demand, while worries about global inflation and sluggish economic growth further depressed the market, Reuters reported.

Brent crude futures fell $1.81, or 1.48%, to $120.20 a barrel by 0443 GMT while U.S. West Texas Intermediate crude was at $118.81 a barrel, down $1.86, or 1.54%. Both contracts dropped over $2 earlier in the session.

Prices fell after Chinese officials warned on Sunday of a “ferocious” COVID-19 spread in the capital and announced plans to conduct mass testing in Beijing until Wednesday.

Both global oil benchmarks rose more than 1% last week after data showed robust oil demand in the world’s top consumer, the United States, despite inflation concerns, and on hopes that consumption in second-biggest global consumer China would rebound after lockdown measures were lifted from June 1.

Concerns about further interest rate hikes following red-hot U.S. inflation data released on Friday are also weighing on global financial markets.