Oil Prices Fall as Worries About Lockdown Prevail Over Demand Outlook

Oil prices fell for the second consecutive session, as renewed lockdown measures to combat COVID-19 raised new concerns about global fuel demand.

Brent crude futures lost eight cents, or 0.1%, to $ 55.38 a barrel, while US West Texas Intermediate crude futures contracted $ 52.26 a barrel, down by a cent.

China announced a jump in new cases of Covid-19 today, which cast a shadow over the outlook for demand in the world’s largest energy consumer, and the mainstay of the strength of global oil consumption.

Last Friday, prices came under more pressure after data from the US Energy Information Administration showed that US crude inventories unexpectedly rose 4.4 million barrels per day in the week ending January 15, against expectations of a decrease of 1.2 million barrels.

Data from Baker Hughes revealed that US energy companies added drilling rigs to explore for oil and gas in the week ending January 22 for the ninth week in a row, but their number is still down 52% compared to this time last year.

Prices have received some support in recent weeks from additional production cuts implemented by Saudi Arabia, the world’s largest exporter. But investors await the resumption of talks between the United States and Iran on the nuclear deal, which could lead to Washington lifting sanctions on Iran’s oil exports and boosting supplies.

Iran’s oil minister said on Friday that his country’s crude exports had increased in the past few months and that its sales of petroleum products to foreign buyers had reached a record high level despite US sanctions.