Oil prices drop as new lockdowns fuel concerns over worldwide demand

25 January 2021 (Last Updated January 25th, 2021 11:21)

Crude oil prices have edged down over the fear that new Covid-19 lockdowns could negatively impact demand for fuel globally.

Oil prices drop as new lockdowns fuel concerns over worldwide demand
The increase in new Covid-19 cases is also affecting the world’s largest energy consumer China. Credit: C Morrison / Pixabay.

Crude oil prices have edged down over the fear that new Covid-19 lockdowns could negatively impact demand for fuel globally.

Brent crude futures for March 2021 slipped by $0.08, or 0.1%, to reach $55.38 a barrel, while US West Texas Intermediate (WTI) crude futures fell by $0.01, or 1%, to reach $52.25 a barrel, reported Reuters.

ANZ analysts were cited by the news agency as saying: “Signs of weaker demand weighed on the market.”

Analysts anticipate business activity and fuel consumption could be affected by the increased lockdowns in Hong Kong, China, and possibly France due to the increasing number of Covid-19 cases.

The increase in new Covid-19 cases is also affecting China, the world’s largest energy consumer.

Reuters cited Iran’s oil minister as saying that oil exports from the country have increased in recent months. Sales of petroleum products reached record highs despite sanctions from the US.

Last week, the US Energy Information Administration released data that showed crude inventories in the country increased by 4.4 million barrels in the week ending 15 January, an increase from the expected draw of 1.2 million barrels, and bringing further pressure on prices.

According to Baker Hughes’ data released last week, the number of oil and natural gas rigs added by US energy firms increased for a ninth week in a row in the week ending 22 January.

However, the rig count is 52% lower compared to the count same time last year.