The price of oil fell in London on Friday due to concerns that the United States would intervene to cool prices. In addition, investors were concerned that the latest outbreaks of COVID-19 in China might weaken demand for fuel.
WTI futures lost 0.38% in value to $81.66 a barrel as Brent oil futures fell around 180 basis points to $84 a barrel.
The black liquid is supported by tight supply markets in Libya and Kazakhstan, as well as a decline in U.S. crude inventories to 2018 lows, which makes Brent and WTI futures positioned to rise for a fourth consecutive week.
As a result of the recent COVID-19 outbreaks, China, the world’s second largest oil consumer, has re-imposed stricter measures. The COVID-19 omicron variant has already spread to Dalian from Tianjin.
The Chinese New Year holidays, which begin on Feb. 5, are when many cities are urging people to stay home. During this time of year, when travel is at its peak, some investors were concerned about fuel demand.
“The market seems to be toppish at the moment, the COVID-19 situation in China and the sale of strategic petroleum reserves (SPR) in the United States are issues of concern.
Exxon Mobil is among six companies that purchased 18 million barrels of strategic crude oil reserves from the U.S. Energy Department.
Many investors believe omicron will have a short-lived impact on the global economy.
In the short-term, there are many risks, but the outlook is optimistic that they will be short-lived. With oil prices over $80 a barrel, the White House was pressured to act and lobby the Organization of the Petroleum Exporting Countries and its allies (OPEC) to fulfill their production quotas.
President Biden may issue another SPR announcement and that won’t solve any problems, but it could send WTI crude all the way down to $80 a barrel.