Oil prices lose more ground Thursday due to mounting Covid-19 infections in China, thus tossing a wet blanket on traders hoping for a surge in fuel demand.

A barrel of European reference oil Brent trades for USD 82.83 Thursday morning CET against USD 81.92 Wednesday afternoon. US benchmark crude West Texas Intermediate sells at the same times for USD 78.39 relative to USD 77.58.

The scope of recent coronavirus contagion in the nation – whose government recently signaled taking a u-turn on its strict Zero Covid policy – combined with doubted official figures have resulted in new restrictions imposed on travelers arriving from China to destinations globally. 

”The lack of clarity over the virus situation in China has prompted some new travel rules from various countries, which could serve as some dampener for previous optimism,” Reuters cites Jun Rong Yeap, market strategist at IGe, noting:

”Heading into 2023, there are chances for oil prices to rebound but it will still boil down to the pace of China’s reopening, and whether market participants have priced for the growth risks as a trade-off to tighter central bank policies.”

Anticipation about new interest rate hikes by the US Federal Reserve also weigh on oil prices.

US crude inventories decreased less than forecast last week, by roughly 1.3 million barrels, according to figures from the American Petroleum Institute.

Extreme winter weather in the US has forced several refineries to close down, resulting in extra accumulation in the nation’s crude stores.

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