Oil Prices Fall As China's COVID Epidemic Dampens Consumption

On Thursday, oil prices declined as rising COVID-19 cases in China dampened expectations of a resurgence in gasoline consumption in the world's second-largest oil user.

The magnitude of the most recent epidemic and skepticism over official statistics caused several nations to impose fresh travel restrictions on Chinese tourists, while China began dismantling the world's tightest COVID framework of quarantines and testing.

By 01:23 GMT, Brent futures for February delivery had dropped 42 cents, or 0.5%, to $82.84 per barrel, while U.S. crude had decreased 50 cents, or 0.6%, to $78.46 per barrel.

Oil markets were also impacted by forecasts of another U.S. interest rate hike, as the Federal Reserve attempts to contain price increases in a labor market with tight labor conditions.

Inventories of crude oil in the United States decreased by around 1.3 million barrels less than anticipated for the week ending December 23, according to market sources quoting American Petroleum Institute data.

Analysts had predicted a decline of 1.5 million barrels. Thursday at 10:30 a.m. Eastern Standard Time, the U.S. government will disclose its weekly numbers.

Also dragging on pricing, pipeline operator TC Energy (NYSE:TRP) said it was attempting to resume the Keystone pipeline segment that was forced to be shut down last month due to a leak. However, a frost in the north has rendered several oil refineries inoperable, boosting crude supply.

The activities of oil refiners continued to increase, but part of this recovery is anticipated to prolong into January.

The markets received some assistance from Russian President Vladimir Putin's embargo on crude oil and oil product shipments to nations that adhere to a Western price ceiling beginning on February 1 and lasting for five months.

Germany stated that the restriction has "no practical relevance" as the government has been trying to replace Russian oil imports and assure supply security since spring.