Oil falls on China’s COVID-19 cases, high crude build
Oil prices settled lower on Friday, weighed down by a build in U.S. 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.
U.S. 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 U.S. crude inventories surprisingly rose by 4.4 million barrels in the most recent week, versus expectations for a draw of 1.2 million barrels.
U.S. 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 U.S. roads fell 11% in November, a steeper decline over October road use as coronavirus cases increased, the U.S. 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.
U.S. crude inventory data showed signs of strength in domestic product demand.
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.
