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.
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.