Global oil market warns of weak demand

Demand for oil fell significantly for the first time in 7 years. It’s assumed that the largest importer of oil in the world, China, is experiencing a certain kind of difficulties because of the COVID-19 restrictions imposed there due to an increase in cases of disease.

November was marked by a weakening of oil markets and prices of futures contracts began to decline. There were a lot of indicators to prove it. For example, spreads for Brent crude and for the leading US grade West Texas Intermediate got into a contango. Thus, the more alarming signals appeared, the worse the situation became. This week, for the first time since January, the price of Brent crude oil futures fell that much.

There is little hope that demand in China will recover to its previous level. Cases of COVID-19 have reached a record number, so the government is imposing more and more restrictions on movement. 

Along with the sanctions imposed by the European Union on Russian oil, which come into force on Dec. 5, the G7 is expected to present a plan of caps on Russian oil.