Oil drops as China lockdowns continue

News of the day, Monday, April 11

BMW CEO Oliver Zipse predicts the semiconductor crisis to remain a problem for the auto industry until 2023.

“We are still in the height of the chip shortage. I expect us to start seeing improvements at the latest next year, but we will still have to deal with a fundamental shortage in 2023.” — Zipse said.

In addition to this, Volkswagen’s Chief Financial Officer Arno Antlitz said, semiconductor supply is unlikely to satisfy demand before 2024. According to him, although the bottlenecks might ease by the end of the year, this would not meet the heightened demand for the chips.

As China undergoes a massive COVID-19 flare and world countries release their oil reserves, oil prices slid more than $2 a barrel today. Brent crude was down 2.3%, and WTI crude decreased by 2.4%. Following its zero-covid strategy, China, the largest oil importer, has shut down a 26 million people large Shanghai, the countries’ industrial hub. A sudden pandemic worsening in PRC helps the U.S. with its plans to cool down soaring oil prices. 

"We expect these Strategic Petroleum Reserve (SPR) volumes — about 273 million barrels in total and 1.3 million barrels per day (mbd) over the next six months — to go a long way in the short term toward offsetting the 1 mbd of Russian oil supply we expect to remain permanently offline," said JP Morgan analyst.

After acquiring a 9.1% share of Twitter last week, Elon Musk has decided not to join its board, as the company’s CEO Parag Agrawal disclosed yesterday. Musk has been offering many quirky ideas on how to improve Twitter. For example, "delete the w in Twitter?" or "Convert Twitter headquarters to homeless shelter since no one shows up anyway."

The price of Brent crude is $100.60, WTI — $96.00, GBP/USD — 1.2992, EUR/USD — 1.0879, and gold costs $1941.60 per ounce.