Oil prices fall on renewed coronavirus concerns as China cases climb

Daniel Fowler
January 13, 2021

Oil prices declined today in light of renewed concerns about a shortage of global demand for fuel, amid the re-imposition of strict lockdown measures as coronavirus cases rise across Europe and the Middle East.

USA crude rose 1.1% to the highest since February 2020 at $53.90 a barrel, after opening at $53.29, and hit a low of $53.23, and Brent crude rose 1.2% to the highest since February at $57.40 a barrel, after opening at $56.71, and hit a low of $56.54. US West Texas Intermediate (WTI) slipped $0.26, or 0.5%, to $51.98 a barrel.

Getty ImagesMost OPEC+ producers will hold production steady in the face of new coronavirus lockdowns.

Saudi Arabia plans to cut output by an extra one million barrels per day in February and March to keep inventories in check.

Goldman expects Brent oil prices to reach $65/bbl in summer 2021, helped by Saudi Arabia's decision to cut its oil output and the implications of a shift in power to the Democrats in the United States. The American Petroleum Institute reported crude inventories dropped by 5.82 million barrels last week, according to people familiar with the figures.

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Saudi Arabia exported about 7 million barrels per day of crude, of which around 70% landed in Asia past year, data on Refinitiv Eikon showed.

President-elect Joe Biden pledged to launch a huge stimulus package to support the USA economy that worth trillions of dollars, and hinted that more details would be revealed on Thursday.

Further, the retreat in the US dollar led by the corrective decline in the US Treasury yields also aided the upside in oil. Investors also await the US Energy Information Administration's (EIA) weekly crude inventories for the next direction on the prices.

Yet again, reports of an unexpected decline in US crude stockpiles seemed to contradict analytical worries that demand recovery has stalled due to rising coronavirus infection rates, and as a result oil prices on Tuesday rose to an 11 month high.

Chinese authorities introduced new curbs in areas surrounding Beijing on Tuesday and Japan is to widen a state of emergency beyond Tokyo.

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