Oil Extends Drop in Thin Trading as Fears Over Covid Wave Mount

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Oil extended losses on concerns that China’s rapid dismantling of its Covid Zero policy could lead to a surge in cases across the world.

West Texas Intermediate fell 2.4% to trade near $77 a barrel. The US will require airline passengers from China to show negative virus tests, while Italy will begin testing travelers from the Asian nation on arrival. That’s overshadowing optimism over a longer-term demand recovery in China.

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“The removal of travel restrictions could precipitate another global outbreak,” said John Driscoll, director of JTD Energy Services Pte. “It raises the potential of a demand hit and flattening prices.”

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Trading volumes have been thin this week, with the holiday period between Christmas and New Year curtailing activity. An industry report on Wednesday showed a decline in US crude inventories, with government data due later on Thursday.

Crude is heading for the first back-to-back quarterly loss since 2019 after a volatile year that saw futures surge following Russia’s invasion of Ukraine before retreating as concerns over a global economic slowdown mounted.

Prices:

WTI for February delivery dropped 2.4% to $77.05 a barrel at 9:05 a.m. London time.
Brent for February settlement, which expires Thursday, declined 2.2% to $81.47 a barrel.
- The more active March contract fell 2.1% to $82.20.