NEW YORK: Oil fell by more than US$4 a barrel on Wednesday (Jan 4), with Brent suffering its biggest percentage loss in the first two trading days of the year since 1991, as demand concerns linked to the global economy and rising Covid-19 cases in China crushed crude prices.
Brent futures settled at US$77.84 (RM342.50) a barrel, falling US$4.26, or 5.2%. US crude settled at US$72.84 (RM320.50) a barrel, shedding US$4.09, or 5.3%.
Brent fell by about 9.4%, its greatest two-day loss at the start of the year since January 1991, according to Refinitiv Eikon data.
“Crude oil is trading lower on concerns around China Covid-19 and the Fed forcing a global recession ... both demand destruction events,” said Bob Yawger, director of energy futures at Mizuho here.
Data from China showed that while no new coronavirus variant has been found there, the country has under-represented how many people have died in its recent, rapidly spreading outbreak, World Health Organization officials said.
The state of the global economy and central bank rate increases also weighed on crude prices.
The Chinese government increased export quotas for refined oil products in the first batch for 2023, signalling expectations of poor domestic demand.
Top oil exporter Saudi Arabia could cut prices for its flagship Arab Light crude grade to Asia in February, having been set at a 10-month low for this month, as concern about oversupply continued to cloud the market.
Opec oil output rose in December, a Reuters survey found on Wednesday, despite an agreement by the wider Opec+ alliance to cut production targets to support the market.
The Organization of the Petroleum Exporting Countries pumped 29 million barrels per day (bpd) last month, the survey found, up 120,000 bpd from November. – Reuters
