Oil is falling due to a new closure in Shanghai

Oil prices fell on Friday, but remained close to their highest levels in three months, as concerns about new closures to combat Covid-19 in Shanghai outweighed the impact of strong fuel demand in the United States, the world’s largest consumer.

Brent crude futures for August delivery fell 77 cents, or 0.6 percent, to $122.30 a barrel by 0448 GMT, after falling 0.4 percent the previous day. US West Texas Intermediate crude for July fell 72 cents, or 0.6 percent, to $120.79 a barrel, after dropping 0.5 percent on Thursday.

However, Brent crude is heading to record gains for the fourth consecutive week, while US crude is heading towards recording the seventh consecutive weekly increase.

“The new anti-epidemic restrictions in Shanghai have raised concerns about demand in China,” said Kazuhiko Saito, chief analyst at Fujitomi Securities.

“But the losses were curbed by expectations that global supply shortages will continue with strong US demand for fuel and a slow increase in crude production by OPEC+,” he added.

Shanghai and Beijing returned to COVID-19 alert status on Thursday after parts of Shanghai, China’s largest economic hub, imposed new lockdown restrictions and the city announced a round of mass testing of millions of residents.

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