Oil prices fell on Wednesday as investors weighed fears of an increase in the number of Covid-19 cases in China, the world’s largest oil importer, in exchange for a chance for fuel demand to recover in the Asian country with the easing of pandemic restrictions there.
At 15:01 GMT, Brent crude oil futures were down $1.69, or two percent, to $82.64 a barrel, and West Texas Intermediate crude oil futures were down $1.55, or two percent, at $77.98 a barrel.
China has said it will stop requiring quarantines from January 8, in an important step towards easing strict border controls. However, Chinese hospitals are facing severe pressure due to the high number of COVID-19 infections.
“Even with China easing Covid restrictions, demand is unlikely to recover in the near term given the sharp drop in overseas business due to the high number of infections,” said Leon Lee, an analyst at CMC Markets. . Trading volumes during this week are expected to be lower than usual as the end of the year approaches, leading to fluctuations in oil prices. Both benchmarks hit three-week highs on Tuesday as a cold snap in the United States shut down a number of production sites and refineries.
Meanwhile, Russia has said it plans to ban oil sales from February 1 to countries that join the Group of Seven’s December 5 crude price cap, though details on how the ban will be enforced are unclear. . A preliminary survey conducted by Reuters on Tuesday showed that U.S. crude oil inventories fell by about 1.6 million barrels last week, with distillate inventories also declining.
