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Oil drops due to increased COVID-19 cases in China and high US oil stocks

by Bunkerist
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Oil prices dropped to a lower level on Friday. There are concerns that increasing US crude oil stocks and increasing restrictions in China, the world’s largest oil importer, will reduce fuel demand.

Brent crude futures fell 69 cents to settle at $55.41 a barrel, for a 0.4% change on the week.

West Texas Intermediate (WTI) crude futures fell 86 cents, or 1.6%, settling at $52.27, nearly unchanged from the beginning of the week.

U.S. crude inventories have increased by a staggering 4.4 million barrels in the last week despite expectations of a 1.2 million barrel decline.

US power firms increased the number of oil and gas towers for the ninth consecutive week with rising energy prices over the past few months, but the total is still 52% below considering this time in last year.

The recovery of fuel demand in China supported market gains late last year as the US and Europe lagged behind, but that source of support has declined as a new wave of COVID-19 cases in Chine at the moment led to new restrictions.

The US Department of Transportation said on Friday that travel on US roads dropped 11% in November and there was a sharper drop in October travel as coronavirus cases increased.

US crude oil inventory data showed signs of strengthening in domestic product demand. US crude oil stocks unexpectedly increased last week, with refineries pushing production up to its highest capacity utilization since March. Demand for gasoline and diesel increased on a weekly basis. Crude oil exports fell dramatically, expressing an accumulation in crude oil stocks.

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