Oil drops on China uncertainty; U.S. demand limits decline
Oil slips for second straight session More countries consider travel restrictions for Chinese visitors Weak dollar, escalating war in Ukraine support US oil markets. Gasoline Stocks Fall, Crude Oil Stocks Rise Last Week – EIAKeystone Pipeline Restarts, Oil Prices Unchanged After Settlement
NEW YORK, Dec 29 (Reuters) – Oil prices fell for a second session in a row 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 country .
China’s government is dismantling pandemic restrictions, but a surge in infections there is prompting tougher travel rules for Chinese visitors to some countries.
Brent crude futures for February delivery fell a dollar to settle at $82.26, down 1.2%. West Texas Intermediate crude futures settled at $78.40 a barrel, down 56 cents, or 0.7%.
Britain is considering whether to impose restrictions on people coming from China. The United States, Japan, India and Taiwan have already instituted testing for those arriving from the country.
“Crude is limping toward the end of the year in weak trade – uninspired by China’s lifting of COVID restrictions amid rising cases, with little to galvanize crude bulls or bears on today’s benign EIA report,” it said. Matt Smith, chief oil analyst at Kapler.
U.S. crude oil inventories rose unexpectedly last week as imports rose and exports fell, the Energy Information Administration (EIA) said on Thursday.
Despite the unexpected rise in crude oil inventories, the report itself was “positive” and showed a “strong rebound” in implied oil demand, resulting in large withdrawals of refined products, said Giovanni Staunovo of Swiss bank UBS. .
Both oil contracts fell more than 2% in early Thursday’s session, but pared losses as the U.S. dollar fell, with investors braced for 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,” said Craig Erlam, senior market analyst at OANDA. “OPEC+ can make an announcement at any moment and suddenly everything changes. Not to mention Russia’s war in Ukraine and how it plays out.”
Russia launched multiple missiles into Ukraine early Thursday, targeting Kiev and other cities in one of Moscow’s biggest airstrikes since the start of the war.
Meanwhile, TC Energy Corp ( TRP.TO ) said the 622,000-barrel-per-day Keystone pipeline was now operational, weeks after a major oil spill in rural Kansas.
The shutdown hit U.S. supplies and briefly raised oil prices, although there was little change in either benchmark after the settlement.
(This story has been corrected to show that WTI was down 56 cents, not $1.13, in the third paragraph)
Reporting by Shariq Khan; additional reporting by Rowena Edwards and Jeslyn Lerh; Editing by Chizu Nomiyama, Emelia Sithole-Matarise, Josie Kao, Leslie Adler, and David Gregorio
Our Standards: The Thomson Reuters Trust Principles.