Oil Prices Have Recovered After A Precipitous Decline Due to Fears About China's Consumption

Both prices closed around 4% lower on Monday, with Brent falling as high as $7 per barrel during the session and WTI falling about $6 per barrel.

In China, lockdowns in Shanghai to combat COVID have entered their fourth week. Meanwhile, instructions for extensive testing, including in Beijing's major shopping center, have sparked fears of additional lockdowns in the Shanghai manner.

"The impact of Chinese lockdowns is over a million barrels per day, and the testing of 12 districts over the next five days will determine the next significant move in crude prices," stated Edward Moya, a senior market analyst at OANDA.

The US dollar also reached a two-year high on Monday, increasing the price of oil for holders of other currencies.

"Supply concerns are not the major concern of energy dealers, and now you have a surging currency exerting additional pressure on all commodities," Moya of OANDA said.