Friday 22 January 2021 6:10 pm

Oil price slips on growing Covid-19 restrictions in China

Oil prices fell today, weighed down by a build in US crude inventories and worries that new pandemic restrictions in China will curb fuel demand in the world’s biggest oil importer.

Brent crude futures declined 60 cents, or 1.1 per cent, to $55.50 a barrel by the end of the week in London.

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US WTI crude futures fell 68 cents, or 1.3 per cent, to $52.45.

Overall US crude inventories surprisingly rose by 4.4m barrels in the most recent week, versus expectations for a draw of 1.2m barrels.

Recovering fuel demand in China underpinned market gains late last year while the US and Europe lagged, but that source of support is fading as a fresh wave of Covid-19 cases has sparked new restrictions.

Travel on US. roads fell 11 per cent in November, a steeper decline over October road use as coronavirus cases increased, the US Transportation Department said Friday.

“The pandemic seems to continue to expand into a second wave in China, with infections rising by the day and reaching again different regions such as Shanghai,” said Rystad Energy oil markets analyst Louise Dickson.

US crude inventory data showed signs of strength in domestic product demand.

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While U.S. crude oil stockpiles rose unexpectedly last week, refineries hiked output to their highest capacity usage since March and demand for gasoline and diesel increased week on week.

“Crude oil exports did fall quite dramatically, which is the main reason for a decent build overall in crude stocks,” said Tony Headrick, energy market analyst at CHS Hedging.