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Oil drops on China uncertainty; U.S. demand limits decline

Published 12/28/2022, 08:51 PM
Updated 12/29/2022, 07:45 PM
© Reuters. FILE PHOTO: Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. Picture taken December 7, 2018. REUTERS/Stringer

© Reuters. FILE PHOTO: Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. Picture taken December 7, 2018. REUTERS/Stringer

By Shariq Khan

NEW YORK (Reuters) - Oil prices fell for a second straight session on Thursday on an uncertain demand outlook as more countries considered restrictions on Chinese travelers with COVID-19 infections spreading in the top oil-importing nation.

China's government is dismantling pandemic restrictions, yet a surge in infections there is prompting tougher travel rules on Chinese visitors in some countries.

Brent crude futures for February delivery fell by a dollar to settle at $82.26, down 1.2%. U.S. West Texas Intermediate crude futures settled at $78.40 per barrel, down by 56 cents, or 0.7%.

Britain is reviewing whether to impose restrictions on people arriving from China. The United States, Japan, India and Taiwan have already imposed testing on arrivals from the country.

"Crude is limping towards the end of the year in thin trading - uninspired by the lifting of COVID restrictions in China amid skyrocketing cases, with little to galvanize crude bulls or bears in today's benign EIA report," said Matt Smith, lead oil analyst at Kpler.

{{8849|U.S. crcrude oil inventories rose unexpectedly last week as imports climbed and exports fell, the Energy Information Administration (EIA) said on Thursday. [EIA/S]

Despite the surprise build in crude oil stocks, the report itself was "positive" and showed a "solid rebound" in implied oil demand, resulting in large draws of refined products, said Giovanni Staunovo of Swiss bank UBS.

Both oil contracts dipped more than 2% early in Thursday's session, but pared losses as the U.S. dollar slipped, with investors on edge about interest rate hikes.

A weaker dollar makes oil cheaper for holders of other currencies.

"With so many moving parts, I don't think anyone can say anything with any strong degree of conviction," Craig Erlam, senior market analyst at OANDA, said. "OPEC+ could make an announcement at any point and suddenly everything changes. Not to mention Russia's war in Ukraine and how that develops."

Russia fired scores of missiles into Ukraine early on Thursday, targeting Kyiv and other cities in one of Moscow's largest aerial assaults since the war started.

Meanwhile, TC Energy (NYSE:TRP) Corp said the 622,000-barrel-per-day Keystone pipeline was now operational, weeks after a major oil spill in rural Kansas.

© Reuters. FILE PHOTO: Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. Picture taken December 7, 2018. REUTERS/Stringer

Shutdown of the line hit supplies in the U.S. and briefly lifted oil prices, although there was little change to either benchmark after settlement.

(This story has been corrected to show WTI settled down 56 cents, not $1.13, in the third paragraph)

Latest comments

Still crude oil didn't touch its lowest point that was predicted 69$.?
China is not relevant here or in India. They buying Russian oil. Stop pointing to China. They buy cheap oil.
Its useless. Reuters paid by the US to keep propaganda bearish news in this Investing Apps for Oil. Only posting Covid and Rate Hikes.
How much are they paid?
There is demand world wide and pur reserves are very low due to the releases to the stratgic petro reserves ! Stop with the low demand talk ! Stop !
Can you read? This article reports: "solid rebound in implied oil demand."
Could we invade these Africans country that comment on here?
Oil must continue down trend
Then you're in for a surprise, cause it won't imo.
Honestly reuters only make bearish news. Demand not only china
That's a lie.   I've seen bullish news from Reuters.
Crude oil prices need to rise
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