The bad news came from two big countries. The United States is battling inflation, while Shanghai is in lockdown again due to Covid-19 which continues to increase. In addition, world oil prices also fell in trading this morning. If the correction persists until the close of trading, world oil prices will officially fall for three days in a row.
On Monday (13/6/2022) at 06:02 WIB, the price of Brent oil was recorded at US$ 120/barrel. Decreased 1.65% compared to last weekend’s closing position.
Meanwhile, the light sweet type or West Texas Intermediate (WTI) costs US$ 118.73/barrel. Down 1.61%.
The decline caused investors’ concerns about the risk of a decline in consumption. This will weigh on oil prices.
In the United States (US), inflation in May 2022 reached 8.6% year-on-year (YoY). This is the highest record since 1981 or 41 years.
Energy prices make inflation rise. Inflation in the energy component was recorded at 34.6% YoY, the highest since 2005. The reason for this was the increase in gasoline, gas, and electricity prices.
If gasoline prices continue to be high, it is feared that consumption will decrease. As a result, oil prices are certainly affected.
“Currently demand is still strong. But if gasoline prices do not stabilize, then consumers will certainly reduce consumption,” said Phil Flynn, an analyst at Price Futures, as quoted by Reuters.
Not only in the United States but consumption in China is also feared to decrease. After the euphoria of the lifting of the lockdown in Shanghai, it turned out that the good news did not last long. The Minhang District in Shanghai has again imposed a lockdown due to the increase in positive cases of Covid-19.
In the capital Beijing, the local government has also re-implemented strict rules. Entertainment venues in Beijing have closed again.
China still adheres to a zero-tolerance policy against Covid-19. As soon as there is a cluster of contagion, it immediately lockdown.
“China’s business climate has not been conducive even though a number of cities have reopened, due to the zero Covid-19 policy. Every morning, people don’t know whether the lockdown will be back in effect,” said Christophe Lauras, president of the French Chamber of Commerce for China, as reported by Reuters.