Oil prices fell today, Wednesday, as investors assessed fears of an increase in the number of Covid-19 cases in China, the largest oil importer in the world, in exchange for chances of a recovery in fuel demand in the Asian country with the easing of pandemic restrictions there.
By 15:01 GMT, Brent crude futures fell $1.69, or two percent, to $82.64 a barrel, and West Texas Intermediate crude futures fell $1.55, or two percent, to $77.98 a barrel.
China said it would stop requiring quarantine from January 8, in a major 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, it is difficult for demand to recover in the short term, given the sharp decline in overseas activities due to the large 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 across the United States shut down a number of production sites and refineries.
Meanwhile, Russia said it aims to ban oil sales from Feb. 1 to countries that adhere to the crude price ceiling imposed by the Group of Seven on Dec. 5, though details of how the ban will be enforced are unclear. A preliminary poll conducted by Archyde.com on Tuesday showed that US crude oil inventories fell by regarding 1.6 million barrels last week, with distillate stocks also declining.
