Oil prices fell on Friday, as China, one of the world’s largest oil consumers, announced new lockdowns and restrictions and reported the highest number of daily coronavirus cases in 10 months.
International benchmark Brent crude was trading at $55.70 per barrel at 0700 GMT for a 1.28% fall after closing Thursday at $56.42 a barrel.
American benchmark West Texas Intermediate (WTI) traded at $53.09 per barrel at the same time for a 0.89% decrease after it ended the previous session at $53.57 a barrel.
The price slump was driven mainly after China put nearly 28 million people back under lockdown, as the country tries to combat the coronavirus, which caused the first death in eight months.
China suffered another setback, as the COVID-19 vaccine developed by China’s Sinovac Biotech proved far less effective than its other counterparts.
While Brazil said the Chinese vaccine CoronaVac has an efficacy rate of just over 50%, the results in Turkey showed that the vaccine is 91.25% effective.
The decline in oil prices came despite the much-awaited US coronavirus relief package designed to jumpstart the economy and speed up the US response to the pandemic.
After promising a plan of trillions of dollars last week, President-elect Joe Biden on Thursday finally unveiled the relief proposal, which he said would initially aim to fight the coronavirus and address economic recovery.
To directly fight the pandemic, the package will contain over $400 billion, including funds to speed up vaccine deployment and to safely reopen most schools within 100 days. The package will also provide individual payments of $1,400.
Biden’s announcement came as the negative economic environment in the country that is already battling increasing coronavirus cases was shaken more after an unexpected increase in US jobless claims which hit their highest level in five months.
Last week, the number of Americans filing new claims for unemployment compensation soared with a week-on-week increase of 181,000, indicating that the COVID-19 pandemic is causing long-term damage to the labor market.
By Sibel Morrow