Oil weakens on China uncertainty, U.S. demand keeps losses in check
NEW YORK — Oil prices fell by more than a dollar on Thursday, as more countries consider restrictions on Chinese travelers, raising concerns over demand during uncertainty about COVID-19 infections spreading in China.
Conflicting headlines about demand from top oil importer China have buffeted traders in recent weeks. While the government is dismantling pandemic restrictions, a surge in infections there is prompting some countries to enact travel rules on Chinese visitors.
Brent crude futures for February delivery fell by $1.01, or 1.2%, to $82.25 a barrel by 11:52 a.m. EST [1652 GMT]. The more actively traded March contract was down about 1%.
The U.S. West Texas Intermediate crude futures for February delivery were down 84 cents, or 1.1%, to $78.12 a barrel.
Britain is reviewing whether to impose restrictions on people arriving from China, while the United States, Japan, India and Taiwan imposed testing on arrivals from the country earlier.
Both oil contracts dipped more than 2% earlier during the session, but pared some losses as the U.S. dollar slipped, with investors on edge at the end of the year as initial optimism over China’s reopening fizzled.
A weaker dollar makes oil cheaper for holders of other currencies and can boost demand.
“With so many moving parts, I don’t think anyone can say anything with any strong degree of conviction,” Craig Erlam, senior market analyst at OANDA said.
“OPEC+ could make an announcement at any point and suddenly everything changes. Not to mention Russia’s war in Ukraine and how that develops.”
Russia fired scores of missiles into Ukraine early on Thursday, targeting Kyiv and other cities in one of Moscow’s largest aerial assaults since the war started.
Oil prices also gained some support after inventories update for last week from the U.S. Energy Information Administration.
Despite a surprise build in crude oil stocks, the report itself was positive, said Giovanni Staunovo of Swiss bank UBS, adding it showed a solid rebound in implied oil demand, resulting in large draws of refined products last week. (Additional reporting by Jeslyn Lerh in Singapore; Editing by Chizu Nomiyama, Emelia Sithole-Matarise and Josie Kao)
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