Oil prices fell on Friday as concerns about Chinese cities in lockdown due to coronavirus outbreaks tempered a rally driven by strong import data from the world’s biggest crude importer and U.S. plans for a large stimulus package.
Brent was down 81 cents, or 1.4%, at $55.61 by 1503 GMT, after gaining 0.6% on Thursday. U.S. West Texas Intermediate crude was down 65 cents, or 1.2%, at $52.92 a barrel, having risen more than 1% the previous session.
Brent and U.S. crude are heading for their first weekly declines in three weeks.
While producers are facing unparalleled challenges balancing supply and demand equations with calculus involving vaccine rollouts versus lockdowns, financial contracts have been boosted by strong equities and a weaker dollar, which makes oil cheaper, along with strong Chinese demand.
“The recent resurgence in coronavirus infections, appearance of new variants, delayed vaccine rollouts and renewed lockdown measures in most major OECD economies has clouded the economic and demand recovery,” said Stephen Brennock of oil broker PVM.
“Simply put, near-term demand expectations aren’t too promising.”
A nearly $2 trillion COVID-19 relief package in the United States unveiled by President-elect Joe Biden may increase oil demand from the world’s biggest crude consumer, but worse than expected jobs data cast a shadow over the plans.
Advisory Editor: Syed Ershad Ahmed
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