Oil Declining in Light of General Isolation Measures in China And US Unemployment Data

Oil prices plunged as fears about Chinese cities being subjected to general isolation measures due to the outbreak of the Coronavirus curbed a rally driven by strong import data from the world’s largest crude consumer and US plans for a stimulus package.

Brent fell 46 cents, or 0.8%, to $ 55.96 a barrel, after gaining 0.6% on Thursday. US West Texas Intermediate crude fell 29 cents, or 0.5%, to $ 53.28 a barrel, after increasing more than 1% in the previous session.

Brent is heading towards its first weekly decline in three weeks, while US crude is on the path of achieving its third weekly gain.

While producers face unparalleled challenges to balance supply and demand equations in light of the calculation of variables involving the distribution of the vaccine against the general isolation measures, the financial contracts are supported by a strong performance of stocks and a weak dollar, which reduces the cost of oil, along with strong Chinese demand.

And a nearly $ 2 trillion bailout package aimed at mitigating the repercussions of the Coronavirus in the United States, which President Joe Biden unveiled, may increase oil demand from the world’s largest crude consumer, but worse-than-expected job data cast a shadow on the plans.

Yesterday, Thursday, customs data showed that China’s imports of crude oil increased 7.3% in 2020, as it received record quantities in two of the four quarters last year as refineries increased operating rates and stimulated lower prices for storage operations.

But China announced the largest daily number of cases of Covid-19 in more than ten months today, Friday, to culminate in a week that saw more than 28 million undergoing general isolation measures and the country’s first death from the Coronavirus in eight months.