© Reuters. FILE PHOTO: Storage tanks are seen at the Petroineos Ineos petrol refinery in Lavera, France, March 29, 2022. REUTERS/Benoit Tessier
Oil prices opened slightly higher on Tuesday, after falling sharply the prior session on worries that continued COVID-19 lockdowns in China would eat into demand and as the U.S. dollar rose to a two-year high.
futures were at $102.57, up 25 cents, or 0.2% and U.S. West Texas Intermediate contracts climbed to $98.70, up 16 cents, or 0.2% at 0002 GMT.
Both contracts had settled down around 4% on Monday, with Brent down as much as $7 a barrel in the session and WTI dipping roughly $6 a barrel.
In China lockdowns to counter COVID in Shanghai have dragged into their fourth week. Meanwhile orders for mass testing, including in Beijing’s largest shopping district, have prompted fears of other Shanghai-style lockdowns.
“The hit from Chinese lockdowns is over a million barrels a day and the testing of 12 districts over the next five days will determine the next major move for crude prices,” wrote Edward Moya, a senior market analyst for OANDA in a note.
The U.S. dollar also hit a two-year high on Monday, making oil more expensive for other currency holders.
“Supply fears are not the primary focus for energy traders, and now you have a surging dollar that is adding extra pressure across all commodities,” OANDA’s Moya said.