Oil prices continued to lose gains having reached 11-month highs, as investor fears over weak demand are fueled by negative vaccine results, while a higher US relief package hopes limit price declines.
International benchmark Brent crude traded at $54.74 at 1300 GMT on Friday, posting a 0.18% decrease from Monday when it traded at 0646 GMT registered at $54.84 per barrel.
American benchmark West Texas Intermediate (WTI) traded at $51.75 at the same time on Friday, relative to $52.23 a barrel on Monday.
While the number of cases worldwide has now reached over 97.6 million, according to the latest data from Johns Hopkins University, investors have been keeping tabs on a large rollout of Covid-19 vaccines to the global population, with expectations of a recovery in oil consumption to pre-pandemic levels.
However, the vaccination of the elderly resulted in unexpected deaths in some countries, including Germany, the US and Norway, and cast doubt over the safety of the vaccines and of prompt economic recovery to negatively affect oil demand.
A rise in locally transmitted coronavirus infections in the world’s second-largest oil consumer, China, added to oil demand fears, as the country tightened lockdowns and imposed restrictions to battle the spread of the virus.
The country, which handled the first outbreak of the pandemic to eradicate any cases for many months, saw refineries in the country hit record production in 2020 despite worldwide weak oil demand caused by the coronavirus pandemic.
According to data from the National Bureau of Statistics of China, the country processed 3% more crude oil than in 2019.
Investors are also closely monitoring the inauguration of US President Joe Biden, as he is expected to announce a $1.9 trillion aid package.
Soon after his inauguration on Wednesday, Biden announced his strategy to combat the COVID-19 outbreak and promised that he would do his best to approve the support package as soon as possible.
While the International Energy Agency (IEA) forecast that the global oil demand would increase by 6% in 2021, the agency also said an acceleration in economic activity and stronger demand is only expected in the second half of the year and not until the widespread vaccination of a certain number of the population is made.
Global oil demand could decline marginally in the first quarter of 2021, as many regions, including many European countries, have re-introduced mobility restrictions.
The global rating agency Fitch Ratings also warned that global oil demand could decline marginally in the first quarter of 2021, “before effective vaccination programs are fully underway.”
By Sibel Morrow