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Oil mixed as Chinese lockdowns raise demand questions

Published 01/15/2021, 09:56 AM
Updated 01/15/2021, 10:00 AM
© Reuters.
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TOKYO, Jan 15 (Reuters) - Oil prices were mixed on Friday as
strong import data from China, the world's biggest crude
importer, that boosted sentiment earlier ran into concerns about
Chinese cities in lockdown due to coronavirus outbreaks.
Brent was down 3 cents at $56.69 by 0133 GMT, after gaining
0.6% on Thursday. U.S. West Texas Intermediate crude CLc1 was
up 12 cents at $53.69 a barrel, having risen more than 1% the
previous session.
While producers are facing unparalleled challenges balancing
supply and demand equations with calculus involving vaccine
rollouts versus lockdowns, financial contracts have been boosted
by strong equities and a weaker dollar, which makes oil cheaper,
along with strong Chinese demand.
"Oil market euphoria is unequivocally strong, but market
indicators from Asia are mixed," RBC Capital Markets said.
"China, the global engine of oil demand growth, is wrestling
with fresh COVID outbreaks," it said.
Crude imports into China were up 7.3% in 2020, with record
arrivals in two out of four quarters as refineries increased
runs and low prices prompted stockpiling, customs data showed on
Thursday. But China reported the highest number of daily COVID-19
cases in more than 10 months on Friday, capping a week that has
resulted in more than 28 million people under lockdown and the
country's first death from the coronavirus in eight months.
Across the wider Asian region, "refining margins remain
abysmal and regional floating storage is higher than month-ago
levels," RBC said.
Raising prospects of increased oil demand from the world's
biggest crude consumer was a nearly $2 trillion COVID-19 relief
package in the U.S. unveiled by President-elect Joe Biden.

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