REFILE-UPDATE 6-Oil falls as China COVID-19 cases trigger clampdowns

REFILE-UPDATE 6-Oil falls as China COVID-19 cases trigger clampdowns

Reuters  | Jan 23, 2021 00:50

REFILE-UPDATE 6-Oil falls as China COVID-19 cases trigger clampdowns

(Refiles to fix typo in headline)
* Shanghai reports first locally transmitted cases in 2
months
* Focus on EIA inventory data due Friday
* Vaccine-fueled recovery likely several months away

By Noah Browning
LONDON, Jan 22 (Reuters) - Oil prices fell on Friday,
retreating further from 11-month highs hit last week, weighed
down by worries that new pandemic restrictions in China will
curb fuel demand in the world's biggest oil importer.
Brent crude LCOc1 futures fell 73 cents, or 1.3%, to
$55.37 a barrel by 1501 GMT, after a 2 cent gain on Thursday.
U.S. West Texas Intermediate (WTI) crude CLc1 futures
dropped $82 cents, or 1.5%, to $52.31, a day after slipping 18
cents.
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. "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.
"A rise in Chinese infection numbers is of particular
concern .. because China is among the world's largest oil
consumers and the market that helped oil prices recover the
most", she added.
The market is awaiting official oil inventory data from the
U.S. Energy Information Administration (EIA) on Friday, after
industry data on Wednesday showed a surprise 2.6 million barrel
increase in U.S. crude inventories last week compared with
analysts' forecasts for a 1.2 million barrel draw. API/S
The report will be published at 11:00 a.m. EST (1600 GMT).
"Global oil demand could decline marginally in the first
quarter of 2021 as many regions, including many European
countries, have re-introduced mobility restrictions," analysts
at Fitch Ratings said in a note.
"The positive effects of vaccination programmes on the oil
demand recovery may not be visible for several months until a
critical mass of population is inoculated."

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