Oil drops 1% as China’s COVID-19 cases trigger crackdown

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In this news, we discuss the Oil drops 1% as China’s COVID-19 cases trigger crackdown

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

U.S. West Texas Intermediate (WTI) crude futures fell 65 cents, or 1.2%, to $ 52.48 a barrel at 7:40 a.m. GMT, after slipping 18 cents on Thursday.

Brent futures fell 58 cents, or 1.03%, to $ 55.52 a barrel, erasing a 2-cent gain on Thursday.

“In line with the more cautious tone displayed by financial markets today in Asia, both contracts fell,” said Jeffrey Halley, senior market analyst at OANDA.

“This morning’s fall leaves both contracts in the middle of their two-week range. They could be potentially vulnerable to deeper corrections if official US crude inventory data from the United States shows an unexpected rise tonight. “

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

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 to contain the spread.

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 holiday, when tens of millions of urban workers typically return to their villages.

“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.”

Report by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Ana Nicolaci da Costa and Simon Cameron-Moore

Original © Thomson Reuters

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