Oil down 2% as China’s COVID-19 cases trigger crackdown

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In this news, we discuss the Oil down 2% as China’s COVID-19 cases trigger crackdown

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LONDON (Reuters) – Oil prices fell on Friday, falling further from 11-month highs reached last week, weighed down by fears that new pandemic restrictions in China will reduce fuel demand at the world’s largest importer of oil.

Brent futures fell $ 1.31, or 2.3%, to $ 54.79 a barrel at 12:30 p.m. GMT, after gaining 2 cents on Thursday.

U.S. West Texas Intermediate (WTI) crude futures fell 1.3 cents, or 2.45%, to $ 51.83, a day after slipping 18 cents.

“The biggest source of concern for the energy complex right now is the increase in coronavirus cases in China,” said Stephen Brennock of broker PVM. “This will dampen the near-term consumption outlook in the global epicenter of global oil demand growth.”

The pick-up in fuel demand in China supported market gains late last year, while the US and Europe lagged behind, but that source of support fades as a new wave of COVID-19 cases has triggered new restrictions.

The Shanghai Mall on Thursday reported its first locally transmitted cases in two months, and Beijing is urging people not to travel during the upcoming Lunar New Year holidays, when tens of millions of urban workers typically head to their cities in the city. ‘origin.

The market awaits official data on oil inventories from the US Energy Information Administration (EIA) on Friday, after industry data showed a surprise increase of 2.6 million barrels in US crude inventories on Wednesday. last compared to analysts’ forecasts for a draft of 1.2 million barrels. [API/S]

The report will be released at 11:00 a.m. EST (4:00 p.m. GMT).

“Global demand for oil could decline slightly in the first quarter of 2021 as many regions, including many European countries, have reintroduced mobility restrictions,” Fitch Ratings analysts said in a note.

“The positive effects of vaccination programs on resuming oil demand may not be visible for several months until a critical mass of the population is inoculated.”

Reporting by Noah Browning in London, Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Jason Neely and Jan Harvey

Original © Thomson Reuters

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