Energy and allied stocks are pulling back sharply on Monday, as oil languishes at near a one-year low.
What Happened: The WTI grade crude oil traded down 3.15% at $73.88-a-barrel, having dropped to an intra-day low of $73.61 earlier in the session. The black gold is now trading at its worst level since Dec. 27, 2021.
The immediate downside catalyst is the situation in China, which has tempered the demand outlook for the commodity. COVID-19 cases in China have risen closer to their April 2022 peak when Shanghai went into a total shutdown. Against this backdrop, the government continued to implement strict protocols, stirring discontentment and public protests.
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As of Monday, areas accounting for about 20% of China’s GDP were impacted, Oil Price.com reported, citing estimates by Nomura. This will likely weigh down on the demand for oil.
In premarket trading on Monday, the United States Oil Fund LP USO plunged 3.46% to $64.44, according to Benzinga Pro data.
Among individual stocks:
- Oil field services company Schlumberger Limited SLB fell 2.50% to $49.56.
- Occidental Petroleum Corp. OXY moved down 2.49% to $68.53.
- Exxon Mobil Corp. XOM retreated 2.22% to $110.70.
- Petrobras Brasileiro S.A. PBR lost 1.94% to $10.10.
- Chevron Corp. CVX slipped 2% to $180.02.
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