# Oil falls $1 as coronavirus, slower China imports hit demand
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-07-26
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Oil Prices Drop $1 Amid COVID-19 Variant Concerns
Meta Description: Find out why oil prices dropped $1 amid worries about COVID-19 variants and China's import rules, despite expectations of limited supply.
URL: https://financedigest.com/oil-falls-1-as-coronavirus-slower-china-imports-hit-demandhtml

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By Noah Browning

LONDON (Reuters) -Oil prices fell $1 on Monday as concerns about fuel demand caused by the spread of COVID-19 variants as well as changes to import rules in China offset expectations of tight supplies through the rest of the year.

Brent crude [futures](https://www.financedigest.com/as-nikkei-eclipses-34-year-record-derivatives-signal-stall-ahead.html) for September fell 97 cents, or 1.3%, to $73.13 a barrel by 0850 GMT while U.S. Texas Intermediate [crude](https://www.financedigest.com/shell-to-shut-in-portions-of-louisiana-zydeco-oil-pipeline-for-maintenance.html) was at $71 a barrel, down $1.07.

Coronavirus cases continued to [rise over the weekend with some countries reporting record daily increases and extending lockdown measures that could slow oil](https://www.financedigest.com/oil-rises-about-2-with-u-s-and-china-inflation-in-focus.html "Oil rises about 2% with U.S. and China inflation in focus") demand. China, the world’s [largest crude](https://www.financedigest.com/omv-petrom-makes-largest-crude-oil-discovery-in-decades.html "OMV Petrom makes largest crude oil discovery in decades") importer, has also seen a rise in COVID-19 cases.

Also, Beijing’s crackdown on the misuse of import quotas combined with the impact of high crude prices could [see China’s growth in oil](https://www.financedigest.com/oil-gains-after-iea-sees-demand-rising-to-record-high.html "Oil gains after IEA sees demand rising to record high") imports sink to its slowest in two decades this year, despite an expected rise in refining rates in the second half.

The delta variant is still spreading and China has started to clamp down on teapots so their import growth would not be that much,” said Avtar Sandu, a senior commodities [manager at Singapore’s Phillips Futures](https://www.financedigest.com/what-is-the-future-of-ip-management.html "What is the future of IP Management?"), referring to independent refiners.

Strong U.S. [demand and expectations of tight supplies have helped both contracts recover from a 7% slump](https://www.financedigest.com/samsungs-quarterly-profit-plunges-to-8-year-low-on-demand-slump.html "Samsung’s quarterly profit plunges to 8-year low on demand slump") last Monday to mark their first gains in 2-3 weeks last week.

[Global oil](https://www.financedigest.com/global-stocks-close-in-on-4-week-highs-oil-rises-on-hopes-of-soft-landing.html "Global stocks close in on 4-week highs, oil rises on hopes of ‘soft landing’") markets are expected to remain in deficit despite a decision by the Organization of the Petroleum Exporting Countries and their allies to raise production through the rest of the year.

[Previous Monday’s sell-off also came on the heels of a report](https://www.financedigest.com/glastons-interim-report-1-january-31-march-2018-orders-received-grew-23-comparable-operating-profit-at-previous-years-level.html "Glaston’s Interim Report 1 January – 31 March 2018: Orders received grew 23%, comparable operating profit at previous year’s level") by the U.S. [Commodity Futures Trading](https://www.financedigest.com/commodities-trading-houses-help-keep-russian-oil-flowing.html "Commodities trading houses help keep Russian oil flowing") Commission (CFTC) which showed money managers cut their net long U.S. crude [futures and options positions in the week](https://www.financedigest.com/small-business-advice-week-guiding-smes-to-a-brighter-future-in-light-of-brexit.html "Small Business Advice Week guiding SMEs to a brighter future in light of Brexit") to July 20.

The oil market should continue to experience a significant deficit in terms of supply versus [demand,”](https://www.financedigest.com/oil-prices-rebound-after-opec-upgrades-china-demand-outlook.html "Oil prices rebound after OPEC upgrades China demand outlook") said Stephen Brennock of oil broker PVM.

As much as this will [keep a floor under prices](https://www.financedigest.com/oil-prices-rise-after-opec-keeps-output-steady-russian-price-cap-imposed.html "Oil prices rise after OPEC+ keeps output steady, Russian price cap imposed"), that is not to say that they will rally strongly from current levels. This is because pandemic-fuelled [demand fears](https://www.financedigest.com/oil-rises-on-demand-hopes-as-banking-crisis-fears-subside.html "Oil rises on demand hopes as banking crisis fears subside") have not completely lost their grip on market sentiment.

(Additional reporting by Florence Tan; Editing by Ana Nicolaci da Costa, Peter Graff and Tomasz Janowski)


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