Oil falls on China's Covid-19 cases, high crude build

US West Texas Intermediate (WTI) crude futures fell 86 cents, or 1.6%, settling at $52.27, nearly unchanged from the beginning of the week.Recovering fuel demand in China underpinned market gains late last year while the United States and Europe lagged.
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| Updated on: 24 Jan 2021, 09:56 AM
FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, US. (Representational photo) (REUTERS)
FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, US. (Representational photo) (REUTERS)
FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, US. (Representational photo) (REUTERS)
FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, US. (Representational photo)

Oil prices settled lower on Friday, 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 fell 69 cents to settle at $55.41 a barrel, for a 0.4% change on the week.

US West Texas Intermediate (WTI) crude futures fell 86 cents, or 1.6%, settling at $52.27, nearly unchanged from the beginning of the week.

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

(Also read | Oil dips after surprise rise in US crude stocks; focus on Joe Biden, stimulus)

US energy firms this week added oil and natural gas rigs for a ninth week in a row amid higher energy prices over the past few months, energy services firm Baker Hughes said on Friday, but the overall count is still 52% below this time last year.

Recovering fuel demand in China underpinned market gains late last year while the United States 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% in November, a steeper decline over October road use as coronavirus cases increased, the US Transportation Department said Friday.

(Also read | Brent crude edges up as optimism over economy trumps demand concerns)

"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.

While US 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.


First Published Date: 24 Jan 2021, 09:56 AM IST
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