Economy News Shares

Covid-19 Threatens China’s 3rd Largest Port-Oil Prices Fall.

Sponsored

China partially closed one of their biggest and busiest cargo ports globally. Ningbo-Zhoushan, after an employee tested positive for Covid-19. Services were paused until further notice—the Meidong Terminal process 25% of the cargo that passes to Ningbo-Zhoushan.

According to the World Shipping Council, the port can handle roughly 27.49 million twenty-foot equivalent units (TEUs) of container volume.

The closure results in global supply chain disruptions, with many shipments due ahead of the Christmas season. The port’s container capacity is also restricted as it cannot take in any more cargo. 

Shipping costs from China and South-East Asia to the East coast of the U.S. are already high, with the U.K. businesses already feeling the pinch of higher shipping costs.

Another port in Shenzhen, Yantian, had to close for a month in May after a worker tested positive for Covid-19.

China has been re-instating lockdown restrictions since the Delta variant spread rapidly. 

Oil prices fall

The IEA (International Energy Agency) stated that the oil demand recovery has reversed amid the coronavirus resurgence.  They downgraded growth in the second half due to the new restrictions. Impacting major oil-consuming countries, particularly China, the world’s leading oil consumer. Now, the port closure and lockdowns have limited mobility, and oil usage declined.

Brent futures fell by 0.7%, trading at $70.82, while crude futures decreased by 0.9% to $68.50.

However, OPEC expects a solid recovery in world demand from 2021 to 2022. The U.S. requested OPEC to increase oil production to decrease high gasoline prices.

Oil has been declining since it reached its pre-pandemic highs in July, demand was slowed down, and U.S. stockpiles increased. In addition, U.S. oil production has been slower in July due to raw materials shortages. The U.S. and China PMI were also down, which crippled the price further, indicating consumers spent more on services. 

OPEC’s target is to increase production by 400,000 barrels per day to increase supply. 

Recent attacks on oil cargo ships in the Gulf of Oman, U.S. and China’s slower demand, and now the closure of a major port is skewing the oil supply and demand. MetaNews to update the latest news further.

Avatar

Justin N. Richards

Justin N. Richards is a Florida-based technical analyst, market researcher, educator, and trader. Justin began his career in Chicago in 2001 performing futures market analysis for floor traders at the Chicago Board of Trade and the Chicago Mercantile Exchange. He also worked for numerous brokerage firms during that time, all of which hold him in high regard, and he has been providing outstanding analysis services for traders worldwide ever since. Mr. Richards is an expert in the area of market patterns, price and time analysis as it applies to futures, Forex, and stocks. In addition to these talents, he provides educational services for investors looking to improve their analysis and trade skills. Justin has a B.A. in Business Administration from UCLA and an M.S. in Financial Markets and Trading from the Illinois Institute of Technology. Justin’s professional experience, education, and discipline, not only make him an exceptional analyst, they point him out as a reliable, hard working and intelligent business strategist who is dedicated to his craft.
Follow Me:

Related Posts