Oil Subdued On Virus Worries

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Oil prices eased for the second day running on Thursday as signs of rising Covid-19 infections and the resultant lockdowns raised demand concerns.

Brent crude for March delivery dropped 0.2 percent to $55.95 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were down 0.1 percent at $52.87.

A drawdown in U.S. crude stocks and positive Chinese trade data helped capped losses.

Data released by Energy Information Administration (EIA) showed that crude inventories fell 3.247 million barrels last week, compared with analysts’ expectations for a 2.26 million-barrel draw.

The American Petroleum Institute’s report showed crude inventories in the U.S. dropped by 5.8 million barrels for the week ending January 8, while analysts had predicted an inventory draw of around 2.3 million barrels for the week.

Meanwhile, China’s exports continued to log robust growth in December driven by higher global demand for pandemic-induced goods, official data revealed today.

Exports grew 18.1 percent on a yearly basis in December, faster than the expected growth of 15.0 percent. Nonetheless, the rate of increase slowed from 21.1 percent posted in November.

Imports growth advanced to 6.5 percent from 4.5 percent a month ago. This was also faster than the economists’ forecast of +5.0 percent.

As a result, the trade surplus increased to $78.17 billion from $75.4 billion in the previous month. Economists had forecast the surplus to fall to $72.4 billion.

Elsewhere, Japan’s core machinery orders, a leading indicator of capital expenditure, unexpectedly rose for a second straight month in November – adding to expectations of a reviving global economy.

Amid a tighter global supply outlook, the U.S. Energy Information Administration now expects Brent crude oil spot prices to average $53 per barrel in both 2021 and 2022 compared with an average of $42 a barrel in 2020.

The material has been provided by InstaForex Company – www.instaforex.com

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