Oil prices declined as concerns about Chinese cities in lockdown due to COVID-19 outbreaks. It tempered a rally propelled by robust import data from the world’s largest crude importer U.S. plans for a massive stimulus package.
At 1316 GMT, Brent declined by 1.5% which equals 83 cents and settled at $55.89. However, in the previous session, it boosted by 0.6%. Meanwhile, the U.S. West Texas Intermediate crude dropped by 1.1% which equals 57 cents and touched $53 a barrel. In comparison, in the previous session, it rose by 1%.
Significantly, the Brent and U.S. crude are on the way of their first weekly drops in three weeks.
Furthermore, financial contracts got support by strong equities and a softer dollar. It makes oil cheaper, along with strong Chinese demand.
According to Stephen Brennock, an oil broker at PVM, the recent resurgence in COVID cases, appearance of new variants, postponed vaccine rollouts and lockdown measures in most major OECD economies has clouded the economic and demand recovery. He announced that near-term demand expectations are not promising.
Furthermore, almost $2 trillion COVID relief package in the United States unveiled by Joe Biden may boost oil demand from the world’s most prominent crude consumer.
Crude imports into China were up 7.3% in the past year
Significantly, according to customs data, crude imports into China were up 7.3% in the past year. It had a record arrival in two out of four quarters as refineries rose and low prices helped stockpile.
However, China announced the highest number of infections in ten months on January 15. It capped a week that has resulted in over 28 million people under lockdown as it experienced its first coronavirus death since May.
According to Bjornar Tonnage from Rystad Energy, the coronavirus pandemic’s spread is retaking centre stage. Traders are getting concerned about the long duration of European lockdown and the new restrictions in China.