Oil prices drop over global fuel demand concerns

11 January 2021 (Last Updated January 11th, 2021 11:37)

Oil prices dropped due to concerns over fuel demand amid coronavirus lockdowns in Europe and new movement curbs in China, the second-largest oil user in the world, following a surge in Covid-19 cases.

Oil prices drop over global fuel demand concerns
Oil prices dropped due to concerns over fuel demand amid coronavirus lockdowns in Europe. Credit: C Morrison from Pixabay

Oil prices dropped due to concerns over fuel demand amid coronavirus lockdowns in Europe and new movement curbs in China, the second-largest oil user in the world, following a surge in Covid-19 cases.

Brent crude oil futures dropped $0.42, or 0.8%, to $55.57 a barrel by 01:46 GMT, while US West Texas Intermediate (WTI) fell $0.22, or 0.4%, to reach $52.02 a barrel, reported Reuters.

Axi chief global market strategist Stephen Innes was quoted by the news agency as saying: “Covid hot spots flaring again in Asia, with 11 million people (in) lockdowns in China Hebei province… along with a touch of FED policy uncertainty has triggered some profit taking out of the gates this morning.”

Mainland China reported its biggest daily rise in Covid-19 cases in over five months. The capital of Hebei province, Shijiazhuang, which is the hub of the new outbreak, has been put under lockdown with the movement of people and vehicles barred in an effort to restrict the spread of the disease.

A number of countries in Europe are also currently under strict lockdowns.

However, oil prices were supported by US President-elect Joe Biden’s plans to announce trillions of dollars in a new Covid-19 relief bill this week.

Crude prices were supported by Saudi Arabia’s commitment last week for a voluntary oil production cut of one million barrels a day in February and March.