Oil prices drop as COVID spike in China bite into hopes for demand recovery

29 Dec 2022 , 09:27 AM

On Thursday, oil prices fell as rising COVID-19 cases in China dampened hopes of a recovery in fuel demand in the world’s second-largest oil consumer.

The magnitude of the latest outbreak, as well as concerns about official data, compelled some countries to impose new travel restrictions on Chinese visitors, even as China began dismantling the world’s most stringent COVID regime of lockdowns and testing.

Brent futures for February delivery were down 42 cents, or 0.5%, to $82.84 per barrel by 0123 GMT. US crude was down 50 cents, or 0.6%, to $78.46 per barrel.

Expectations of another U.S. interest rate hike in the United States, as the Federal Reserve tries to limit price rises in a tight labour market, also shaken oil markets.

Oil refineries have continued to ramp up operations, but some of this recovery is expected to last until January.

Russian President Vladimir Putin’s ban on exports of crude oil and oil products to countries that adhere to a Western price cap, however, lent some support to the markets.

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