Oil Prices Fall for Second Session as Concerns Over COVID-19 Freeze Throw a Cloud on Demand Outlook

SINGAPORE (Reuters) – Oil prices fell for a second consecutive session on Monday as renewed COVID-19 blockades raised new concerns about global fuel demand.

Brent futures for March fell 15 cents, or 0.3%, to $ 55.26 per barrel by 0158 GMT, while US West Texas Intermediate crude oil for March was at $ 52.19 per barrel. drop of 8 cents, or 0.2%.

“Signs of weaker demand have weighed on the market,” ANZ analysts said, pointing to blockades in Hong Kong, China and possibly France as COVID-19 cases rise, which limits commercial activity and the fuel consumption.

On Monday, China reported an increase in new COVID-19 cases, casting a veil on the outlook for demand in the world’s largest energy consumer, the main pillar of strength of global oil consumption.

Prices came under further pressure after the data last Friday from the US Energy Information Administration showed that US crude oil inventories rose astonishingly 4.4 million barrels in the week through January 15, against expectations for a 1.2 million barrel withdrawal. [EIA/S]

The number of oil and natural gas rigs added by US energy companies increased for the ninth consecutive week in the week through January 22, but are still 52% lower over this period last year, data from Baker Hughes showed.

Some price support has come in the last few weeks from further production cuts from the first world exporter, Saudi Arabia. But investors are waiting for a resumption of talks between the US and Iran over a nuclear deal – which could see Washington lift sanctions on Tehran’s oil exports, increasing supply.

Iran’s oil minister said Friday that the country’s oil exports have increased in recent months and its sales of petroleum products to foreign buyers hit record highs despite US sanctions.

On Sunday, Indonesia said its coast guard seized the Iranian-flagged MT Horse and Panamanian-flagged MT Freya over suspected illegal transfers of fuel off the country’s waters.

Report by Florence Tan; Editing by Kenneth Maxwell