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NEW DELHI : Crude oil prices fell more than 4% on Monday as rising coronavirus cases in China has raised fears of curbs on mobility and consequent impact on fuel demand.

A surge of fresh cases in Beijing has dampened market sentiment, experts said. China’s major business hub of Shanghai is already under lockdown.

Further, anticipation of rate hikes by the US Federal Reserve also weighed on sentiment as any increase in interest rates would hinder growth.

At the time of writing this report, the June contract of benchmark Brent futures on the Intercontinental Exchange was trading at $101.94 per barrel, 4.42% from its previous close. The June contract of West Texas Intermediate on NYMEX fell 4.34% to $97.64 per barrel.

Ravindra Rao, head, commodity research at Kotak Securities said along with demand concerns, hopes of improvement in supplies from Libya also weighed on oil prices. “Crude may remain under pressure on concerns about the Chinese economy; however, a sharp fall may not materialize with supply risks looming large," Rao said.

Although oil prices surged to multi-year-highs last month post Russia’s invasion of Ukraine, they have been largely subdued in the past three weeks due to the unfolding covid-19 scenario in China and its potential impact on the global economy.

Last week, the International Monetary Fund (IMF) lowered its forecast for global economic growth from an estimated 6.1% in 2021 to 3.6% in 2022 and 2023. “This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January," IMF said.

However, in the days ahead, energy prices are expected to stay elevated, Kotak Institutional Equities said.

“Energy prices may stay at elevated levels or increase further given diminishing probability of a peaceful resolution of the Russia-Ukraine war and increasing probability of Europe reducing its energy imports from Russia," it said.

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