Oil prices fall nearly 2% as covid cases surge in China

Oil prices fall nearly 2% as covid cases surge in China


NEW DELHI: Global crude oil prices slumped on Thursday amid a spike in coronavirus infections in China, triggering concerns over demand in the world’s second largest importer of oil.

Around 350pm, the February Brent contract on the Intercontinental Exchange traded at $82.00 per barrel, down 1.51% from its previous close. West Texas Intermediate (WTI) on the NYMEX were down 1.99% at$77.39 a barrel.

Rahul Kalantri, vice president for commodities at Mehta Equities, said that oil prices declined on fears that surging virus cases in China would hinder demand recovery. “Oil markets were also buffeted by expectations of another interest rate hike in the United States, as the Federal Reserve tries to limit price rises in a tight labour market,” he said.

Market participants noted that trading volumes are expected to be lighter than usual as the year draws to a close, creating more volatility, Kalantri said. “We expect crude oil prices to remain volatile in today’s session.”

Citing data from the American Petroleum Institute (API), Ravindra V. Rao, head of commodity research at Kotak Securities Ltd., said that crude oil inventories in the US fell 1.3 million barrels as against estimates of 1.5 million barrels drawdown in the week ended 23 December.

“Focus will now turn to the official EIA (US Energy Information Administration) report due to be released later in the day. Expectation is for a similar draw of about 1.5 million barrels. Product inventories will also be in focus,” Rao said.

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