Crude oil prices have dropped over concerns that the new Covid-19 pandemic restrictions in China could limit the demand in the second-biggest economy in the world.
Brent crude fell be by $0.45, or 0.8%, to reach $55.65 a barrel while US West Texas Intermediate (WTI) crude futures fell by $0.53, or 1%, to reach $52.60 a barrel, reported Reuters.
Late last year, fuel demand recovery in China supported market gains unlike in the US and European countries where growth is delayed.
However, the new restrictions being imposed to contain the fresh wave of the pandemic is affecting the source of support for the fuel demand, according to Reuters.
Axi chief market strategist Stephen Innes said was cited by the news agency as saying: “Indeed, investors are struggling to see through short-term pain for long-term gain heading into the weekend as Covid case counts in China are the most significant demand concern for traders.”
Consultancy firm FGE said that the gasoline demand witnesses a seasonal boost in China during the New Year holidays, but tightened Covid-19 restrictions this year could curb demand.
Energy consultancy Trifecta director Sukrit Vijayakar was quoted by the news agency as saying: “We now have some data on vaccine rollouts, which show that acceptability is a bit on the low side, so the pace of implementation may be slow…there may well be a bearish momentum developing (in oil markets).”