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s China grapples with a surge of Covid-19 cases, a closely watched-gauge of Asian oil-demand has fallen to a seven-month low.
On Thursday, the premium of Oman futures over Dubai swaps dropped beneath $1 per barrel on the Dubai Mercantile Exchange. So far this month it has dropped about 80%.
In November, global oil markets have weakened as a whole raft of widely-watched metrics have been pointing to a loosening market and lower prices, driving futures down. The prompt spread for both European benchmark Brent crude and US benchmark West Texas Intermediate have fallen into contango, a bearish pricing pattern which points to plentiful near-term supply. Amid the flurry of red flags, Brent futures have fallen this week to the cheapest prices since January.
Hopes among traders for a recovery in China are dwindling daily as Covid-19 levels continue to rise, hitting record levels. Officials are now stepping up containment measures and movement restrictions. A major reduction in Chinese demand due to more lockdowns will loosen supplies globally and drive prices down.
Since the invasion of Ukraine, the Oman futures-Dubai swaps gauge has mostly commanded multi-dollar premiums, only slipping below $1 for a single day in April. In March it rose as high as $15, as buyers began to avoid Russian crude, which increased demand for Mideast oil, driving the premium up.
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