ANKARA – After reaching 11-month highs last week, oil prices fell today as China reported its biggest rise in daily coronavirus cases in more than five months, reigniting lingering concerns over weak demand, according to a report by Anadolu Agency.
International benchmark Brent crude was trading at US$55.19 per barrel at 0702 GMT for a 1.42% fall after closing Friday at US$55.99 a barrel, it reported.
American benchmark West Texas Intermediate (WTI) traded at US$51.73 per barrel at the same time for a 0.98% decrease after it ended the previous session at US$52.24 a barrel.
Today’s price slump was spurred mainly by demand concerns after more than 100 people tested positive in Hebei province in northern China, one of the world’s largest oil consumers.
The government imposed partial lockdowns and travel restrictions in and around the province bordering the capital Beijing.
Further weighing on prices, the number of US oil rigs increased by eight to 275 last week compared to the previous week, signaling greater short-term output and raising supply glut concerns.
Political Risk and Oil Analyst Jose Chalhoub told Anadolu Agency that last week’s price jump was a direct impact of the recent agreement within OPEC+ to keep current cuts in January, as well as the upcoming stimulus package in the US.
He recalled that the recent seizure of a South Korean vessel by Iran shows that geopolitical risks still weigh heavily on the oil market aside from decisions on supply and demand by main players.
He added, however, that “in the coming months the story could change and prices might not sustain their current positive momentum”.
Chalhoub told Anadolu Agency that this is due to persistent pandemic concerns, “more production coming from Libya, the potential rise of Iranian oil production depending on the moves by the Biden administration in the US and how OPEC and non-OPEC behave while the global economy is still in pain.” – Bernama, January 11, 2021
