Oil falls as China COVID-19 cases trigger clampdowns

By Noah Browning LONDON (Reuters) - Oil prices fell on Friday, retreating further from 11-month highs hit last week, weighed down by worries that new pandemic restrictions in China will curb fuel demand in the world's biggest oil importer. Brent crude futures fell 73 cents, or 1.3%, to $55.37 a barrel by 1501 GMT, after a 2 cent gain on Thursday.

Reuters January 23, 2021 00:06:48 IST
Oil falls as China COVID-19 cases trigger clampdowns

COVID-19 cases trigger clampdowns" src="https://images.firstpost.com/wp-content/uploads/reuters/01-2021/23/2021-01-22T020929Z_1_LYNXMPEH0L04J_RTROPTP_2_GLOBAL-OIL.jpg" alt="Oil falls as China COVID19 cases trigger clampdowns" width="300" height="225" />

By Noah Browning

LONDON (Reuters) - Oil prices fell on Friday, retreating further from 11-month highs hit last week, weighed down by worries that new pandemic restrictions in China will curb fuel demand in the world's biggest oil importer.

Brent crude futures fell 73 cents, or 1.3%, to $55.37 a barrel by 1501 GMT, after a 2 cent gain on Thursday.

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

Recovering fuel demand in China underpinned market gains late last year while the United States and Europe lagged, but that source of support is fading as a fresh wave of COVID-19 cases has sparked new restrictions.

"The pandemic seems to continue to expand into a second wave in China, with infections rising by the day and reaching again different regions such as Shanghai," said Rystad Energy oil markets analyst Louise Dickson.

"A rise in Chinese infection numbers is of particular concern .. because China is among the world’s largest oil consumers and the market that helped oil prices recover the most", she added.

The market is awaiting official oil inventory data from the U.S. Energy Information Administration (EIA) on Friday, after industry data on Wednesday showed a surprise 2.6 million barrel increase in U.S. crude inventories last week compared with analysts' forecasts for a 1.2 million barrel draw.

The report will be published at 11:00 a.m. EST (1600 GMT).

"Global oil demand could decline marginally in the first quarter of 2021 as many regions, including many European countries, have re-introduced mobility restrictions," analysts at Fitch Ratings said in a note.

"The positive effects of vaccination programmes on the oil demand recovery may not be visible for several months until a critical mass of population is inoculated."

(Refiles to fix typo in headline)

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

This story has not been edited by Firstpost staff and is generated by auto-feed.

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