Oil prices dipped on Thursday as bullish signals from Chinese import data and US crude oil stock draws were outweighed by surging coronavirus cases in Europe and new lockdowns in China.
Brent crude oil futures fell $0.36 to $55.70 a barrel by 0917 GMT, while US West Texas Intermediate (WTI) crude dropped $0.26 to $52.65.
Brent’s six-month backwardation, whereby contracts for later delivery are cheaper, fell to its lowest since January 5, indicating bullish sentiment easing.
China, the world’s second-largest oil consumer, reported its biggest daily jump in new Covid-19 cases in more than 10 months as infections in a northeastern province nearly tripled.
Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have significant impact for the next few months.
Oil producers face an unprecedented challenge balancing supply and demand as factors including the pace and response to Covid-19 vaccines cloud the outlook, said an official at the International Energy Agency (IEA).
“This (price) retracement, although it might last more than just one day, should not be prolonged and violent,” said PVM analyst Tamas Varga, pointing to Saudi Arabia throttling oil supply to some Asian buyers.
Supporting prices, China’s total crude oil imports rose 7.3% in 2020 despite the coronavirus shock, with record arrivals in the second and third quarters as refineries expanded operations and low prices encouraged stockpiling, customs data showed.
Also giving a floor to prices, US crude oil stockpiles last week fell more than expected, though gasoline and distillate inventories rose as refiners ramped up output to the highest level since August, the Energy Information Administration said on Wednesday.
Raising hopes of increased oil demand was a hefty US Covid-19 relief package, which President-elect Joe Biden is due to unveil on Thursday.