Mass COVID testing for Beijing39;s Chaoyang district
U.S. inflation data heightens fears of further big rate hikes
Unrest halves Libyan oil output

LONDON, June 13 Reuters Oil dropped about 2 a barrel on Monday as a flareup in COVID19 cases in Beijing dented hopes of a Chinese demand rebound, while worries about more interest rate hikes to control rampant inflation added further pressure.

Beijing39;s most populous district Chaoyang announced three rounds of mass testing to quell a ferocious COVID19 outbreak that emerged last week. Mass testing would take place until Wednesday.

Brent crude was down 1.86, or 1.5, to 120.15 at 0907 GMT, while U.S. West Texas Intermediate crude was down 2.15, or 1.8, at 118.52.

The present price fall is exacerbated by warnings of a 39;ferocious39; spread of the COVID virus in Beijing by officials, casting doubt on immediate demand recovery, said Tamas Varga of oil broker PVM.

Concern about further rate hikes, heightened by Friday39;s U.S. inflation data showing the U.S. consumer price index rose 8.6 last month, also pushed oil lower and weighed across financial markets.

The data put markets on alert that the Federal Reserve may tighten policy for too long and cause a sharp slowdown. The next Fed policy decision is on Wednesday.

Oil has surged in 2022 as Russia39;s invasion of Ukraine compounded supply concerns and as oil demand recovered from COVID lockdowns. Brent hit 139, the highest since 2008, in March, and both oil benchmarks…