Oil drops as China COVID-19 cases trigger crackdown

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In this news, we discuss the Oil drops as China 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 73 cents, or 1.3%, to $ 55.37 a barrel at 1501 GMT, after gaining 2 cents on Thursday.

U.S. West Texas Intermediate (WTI) crude futures fell 82 cents, or 1.5%, to $ 52.31, a day after slipping 18 cents.

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 pandemic appears to continue to develop in a second wave in China, with infections increasing day by day and again reaching different regions such as Shanghai,” said Louise Dickson, oil markets analyst at Rystad Energy.

“An increase in the number of Chinese infections is of particular concern … because China is one of the largest consumers of oil in the world and the market which has helped oil prices the most to recover,” he said. -she adds.

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.”

(The story is renewed to correct a typo in the title).

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

Original © Thomson Reuters

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