Brent oil futures fell 30 cents, or 0.4%, to $84.17 a barrel at 0150 GMT. US West Texas Intermediate crude fell 45 cents, or 0.6%, to $81.67 a barrel.
China, the No. 2 oil consumer worldwide, has suspended some international flights and stepped up efforts to contain a virus outbreak in Tianjin, while the highly transmissible Omicron variant has spread to the northeastern city of Dalian.
Many cities, including Beijing, have also urged people to stay during the Lunar New Year holiday, which could reduce transportation fuel demand during a peak travel season.
“The market is a bit off-putting,” said Avtar Sandu, a commodities manager at Phillip Futures in Singapore, adding that reports of the COVID-19 situation in China and the sale of strategic petroleum reserves (SPR) in the United States are a point of concern. were care.
The U.S. Department of Energy said Thursday it had sold 18 million barrels of strategic crude oil reserves to six companies, including Exxon Mobil and a unit of refinery Valero Energy Corp.
Nevertheless, Brent and WTI prices are set to rise for the fourth week in a row, supported by supply concerns in Libya and Kazakhstan and a drop in US crude stocks to lows of 2018. Some investors are also optimistic that Omicron’s impact on the global economy and oil demand will be short-lived.
Multiple banks have predicted that the price of oil will reach $100 a barrel later this year as demand is expected to outpace supply.
“The near-term outlook still carries a lot of risk, but the optimism is high that it will be short-lived,” OANDA analyst Edward Moya said in a note.
However, with oil prices above $80 a barrel, there is increasing political pressure on the White House to lobby OPEC+ to meet their production quotas, he said.
“Biden may resort to another SPR release and while that won’t solve any problems, it could send WTI crude to the $80 level,” Moya said.