Oil prices have dropped due to concerns over fuel demand as the world’s largest crude importer China reported the highest number of daily Covid-19 cases in more than ten months.
Brent dropped by $0.93, or 1.7%, to $55.49 by 9:50am GMT, while US West Texas Intermediate crude fell by $0.71, or 1.3%, to $52.86 a barrel, reported Reuters.
Stephen Brennock of oil broker PVM was quoted by the news agency as saying: “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. Simply put, near-term demand expectations aren’t too promising.”
A $1.9tn Covid-19 relief package unveiled by US President-elect Joe Biden may increase fuel demand, but worse than expected jobs data is likely to offset this demand.
More than 28 million people in China are under lockdown, with the country reporting the first death due to coronavirus in eight months.
RBC Capital Markets was quoted by the news agency as saying: “Oil market euphoria is unequivocally strong, but market indicators from Asia are mixed. China, the global engine of oil demand growth, is wrestling with fresh Covid outbreaks.”