Oil slides as rising COVID-19 cases in China trigger lockdowns

Oil prices fell on Friday, dropping further from 11-month highs hit last week, weighed down by concerns that renewed COVID-19 lockdowns in China will affect fuel demand in the country.

U.S. West Texas Intermediate crude futures eased 1%, or 53 cents, at $52.60 per barrel following an 18-cent fall on Thursday. Brent crude futures dropped 0.8%, or 45 cents, at $55.65 per barrel.

Improving Chinese fuel demand supported market gains late last year, but that support is fading as rising coronavirus cases forced new lockdowns.

Shanghai reported its first locally transmitted infections in two months on Thursday. Beijing is discouraging people from travelling during the pandemic as the Lunar New Year holiday nears.

Investors are waiting for official fuel inventory data from the U.S. Energy Information on Friday. U.S. crude stocks posted a sudden 2.6-million barrel rise on Wednesday last week, contrary to analysts’ expectations for a 1.2-million-barrel drawdown.