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Crude Oil Dips on Soaring China COVID-19 Cases

Crude oil settled lower on Wednesday as traders weighed concerns over a surge in COVID-19 cases in China, the world’s top oil importer.

Brent crude futures fell by $1.07 or 1.3 per cent to settle at $83.26 a barrel, while the US West Texas Intermediate (WTI) crude futures lost 57 cents or 0.7 per cent to trade at $78.96 per barrel.

China has said it will stop requiring inbound travellers to quarantine from January 8, a major step towards relaxing stringent curbs on its borders. However, Chinese hospitals have been under intense pressure due to a surge in COVID infections.

China’s latest COVID-19 wave could be far more serious than the government is claiming, estimating that more than 5,000 people are probably dying each day from COVID-19 in China.

Analysts also suggested that 1.3 to 2.1 million people could die in the country’s current COVID outbreak.

At the same time, the lifting of travel restrictions is not likely to result in a surge in Chinese travel to some countries, which are considering imposing new limitations on Chinese visitors due to the surge in COVID cases and a lack of accurate data

On its part, the US government is among those considering new restrictions.

“There are mounting concerns in the international community on the ongoing Covid-19 surges in China and the lack of transparent data, including viral genomic sequence data,” US officials said in a statement.

“Without this data, it is becoming increasingly difficult for public health officials to ensure that they will be able to identify any potential new variants and take prompt measures to reduce the spread,” the world’s largest oil consumer added.

Prices were also affected by expectations of another interest rate hike in the US as the Federal Reserve tries to limit price rises in a tight labour market.

Market participants noted that trading volumes this week are expected to be lighter than usual as the end of the year approaches, creating more volatility in oil prices.

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