Oil prices down as China tightens virus restrictions

Oil prices plummeted on Friday over the resurgence of coronavirus infections in China, the world’s second-largest oil consumer, as the country tightened lockdowns and restrictions, raising concerns about poor demand.

The international benchmark Brent crude was trading at $ 55.47 a barrel from 0659 GMT, down 1.12% after closing Thursday at $ 56.10 / barrel.

The American benchmark West Texas Intermediate (WTI) traded at $ 52.46 per barrel at the same time, down 1.26% after ending the previous session at $ 53.13 / barrel.

Brent was at lower levels for a while, supported by this widespread vaccination regime, after OPEC + reached its highest level in 11 months following the decision to reduce 1 million barrels a day in February and March.

“New restrictions will be imposed in the upcoming period. [Lunar New Year] Bjornar Tonhaugen, head of oil markets at Norway-based Rystad Energy, told Anadolu Agency that the holiday season and less fuel will be consumed than would normally be.

Underlining that China is a very important oil market, Erdogan said “the slowdown is always an indicator of decline”.

Meanwhile, markets are still focusing on the much-anticipated $ 1.9 trillion aid package promised by the new US Administration.

Shortly after taking office Wednesday, US President Joe Biden unveiled his strategy to tackle the COVID-19 outbreak and promised to do his best to approve the support package as soon as possible.

“We will do committee work next week, so we will be fully prepared to go to the ground when we return in February,” Speaker of the House of Representatives Nancy Pelosi told reporters on Thursday.

When the US introduced the stimulus package, Tonhaugen said he expected to see an increase in short-term oil consumption.

“The actions of the Biden administration are expected to reduce the long-term demand for oil. However, as the incentive package and infrastructure plan put forward by the new administration will cause an increase in oil consumption, it will not appear immediately in this first period ”.

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