By Yuka Obayashi

TOKYO, Reuters – On Monday oil prices lost more because of persistent concerns that the prolonged COVID-19 lockdown in Shanghai and possible U.S. rate increases would slow global economic growth.

U.S. West Texas Intermediate oil futures declined $1.90 (or 1.8%) to $104.75/barrel at 0015 GMT. U.S. crude futures for U.S. West Texas Intermediate fell $1.89 (or 1.9%) to $100.18/barrel.

Last week, the benchmarks experienced a drop of nearly 5% due to concerns about demand.

Hiroyuki Kikukawa (OTC:) Securities general manager, stated that “Bearish sentiment outweighed worries over tight global supply”

He said that investors are looking to correct their position before the U.S. Summer Driving Season begins later in May.

He stated that oil prices will not fall below $90 per barrel because of the possibility of an EU ban on Russian oil, a deteriorating Ukraine crisis and other factors.

Shanghai officials have set up fencing outside of residential buildings to combat an outbreak COVID-19, prompting a fresh outcry from the public. The lockdown has kept many of Shanghai’s 25million residents inside.

Jerome Powell (the Chairman of U.S. Federal Reserve) indicated that half-point interest rate increases “will not be off the table” for the Fed meeting in May. This is in order to approve the next, which are likely to be several hikes in this year’s calendar.

The supply side saw U.S. oil companies add oil and rigs to their fleet for the fifth consecutive week amid rising prices and government prodding.

Three sources close to the loading plan of the Russian-Kazakh Caspian Pipeline Consortium (CPC), told Reuters that the European Russia-Kazakh Caspian Pipeline Consortium (CPC), was resuming exports starting April 22. This follows a nearly 30-day period of interruptions due to repairs at one of its main loading facilities.

Nevertheless, analysts believe that the Ukraine crisis is worsening and could increase pressure on the EU for sanctions to Russian oil. Prices could rise later in the year.

Russia is Europe’s biggest gas supplier. It also happens to be the second largest oil exporter, after Saudi Arabia.

Morgan Stanley (NYSE:) Increased Brent’s third quarter price prediction by $10 to $130. This was due to a larger deficit this year, mainly because of lower supplies from Russia and Iran. These supply headwinds are likely to be outweighed by short-term demand headwinds.