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Commodity Market: WTI Crude Oil plunges 2% as COVID case surge in China dims fuel demand outlook

Futures on US West Texas Intermediate Crude Oil extended losses from the prior two trading days on Thursday, as spiking new COVID-19 infections in China dampened fuel demand outlook for the biggest oil importer globally.

The scale of the latest COVID outbreak across the Asian nation caused some countries to put in place new travel rules on visitors from China, even as Beijing began easing its stringent COVID policy of lockdowns and testing.

“The lack of clarity over the virus situation in China has prompted some new travel rules from various countries, which could serve as some dampener for previous optimism,” Jun Rong Yeap, market strategist at IG, was quoted as saying by Reuters.

“Heading into 2023, there are chances for oil prices to rebound but it will still boil down to the pace of China’s reopening, and whether market participants have priced for the growth risks as a trade-off to tighter central bank policies.”

In other news, pipeline operator TC Energy Corp said it was working to restart the segment of the Keystone pipeline after a leak earlier in December caused it to be shut down.

On the other hand, a price-supporting factor remained Russia’s ban on exports of crude oil and oil products from February 1st for 5 months to nations that stick with a Western price cap.

As of 10:01 GMT on Thursday WTI Crude Oil Futures were losing 1.91% to trade at $77.45 per barrel. Still, the black liquid has rebounded 10.47% since its December 9th low of $70.11 per barrel.

At the same time, Brent Oil Futures were losing 1.74% on the day to trade at $82.53 per barrel. Still, Brent Oil has rebounded 9.11% since its December 9th low of $75.64 per barrel.

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