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Oil price drops more than 2% over COVID-19

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Oil price drops more than 2% over COVID-19

By Ediri Ejoh

Oil prices fell more than two per cent on as concerns about Chinese cities in lockdown due to coronavirus outbreaks tempered a rally driven by strong import data from the world’s biggest crude importer and U.S. plans for a large stimulus package.

Brent crude fell $1.32, or 2.34 per cent, to settle at $55.10 per barrel, after gaining 0.6 per cent on Thursday. U.S. West Texas Intermediate crude settled $1.21, or 2.26 per cent, lower at $52.36 per barrel, having risen more than 1 per cent the previous session.

Both benchmarks, which hit their highest in nearly a year earlier in the week, were are heading for their first weekly declines in three weeks.

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While producers are facing unparalleled challenges balancing supply and demand equations with calculus involving vaccine rollouts versus lockdowns, financial contracts have been boosted by strong equities and a weaker dollar, which makes oil cheaper, along with strong Chinese demand.

These positives were called into question on Friday as the dollar rose and China ramped up lockdown measures.

A nearly $2 trillion COVID-19 relief package in the United States unveiled by President-elect Joe Biden may increase oil demand from the world’s biggest crude consumer. Still, some analysts said the move may not be enough to stoke demand.

Vanguard News Nigeria

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