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Oil Down, Ever-Increasing COVID-19 Cases Sees Fuel Demand Worries Rise

·2-min read

By Gina Lee

Investing.com – Oil was down Monday morning in Asia, recording a second consecutive session of losses as the ever-rising number of COVID-19 cases continued to raise fuel demand worries.

Brent oil futures were down 0.24% to $55.12 by 10:29 PM ET (3:29 AM GMT), rolling over to the April 2021 contact on Jan. 24. WTI futures inched down 0.10% to $52.22.

“Signs of weaker demand weighed on the market,” ANZ analysts said in a note. Recent lockdowns in Hong Kong and China, and with France contemplating fresh lockdowns, saw restricted business activity and fuel consumption.

China’s National Health Commission recorded 124 COVID-19 cases on Jan. 24, up from 80 and the worst wave of new infections seen since March 2020. The numbers dimmed demand prospects in the world’s largest oil importer, and in turn dimming prospects for global oil consumption.

Prices also came under pressure on Friday after the U.S. Energy Information Administration released U.S. crude oil supply data showing a surprise build.

The data showed a build of 4.351 million barrels in the week to Jan. 15, against the 1.167-million-barrel draw in forecasts prepared by Investing.com and the 3.247-million-barrel build reported during the previous week.

Data from the American Petroleum Institute released during the previous week showed a build of 2.562 million barrels.

U.S. energy firms added more oil and natural gas rigs for a ninth consecutive week in the week to Jan. 22, but are still 52% below this time last year, according to data from Baker Hughes.

A decision made earlier in the month by Saudi Arabia, the world’s top oil exporter, to implement additional production cuts, continues to give the black liquid some support.

Investors are also monitoring whether the U.S. and Iran will resume talks on a nuclear accord, which, if successful, could see sanctions on Iranian oil exports lifted and boost supply. Iran’s oil exports have climbed in recent months and its sales of petroleum products to overseas buyers reached record highs despite U.S. sanctions, Iranian oil minister Bijan Zanganeh said on Friday.

Meanwhile, Indonesia’s coast guard has seized the Iranian-flagged MT Horse and the Panamanian-flagged MT Freya vessels over suspected illegal fuel transfers off Indonesian waters.

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