TOKYO- Oil prices resumed their decline on Monday, falling around 1 percent as worries about a drop in demand for fuel products in the wake of yet more lockdowns dominated trading.
Brent crude was down 60 cents, or 0.9 percent, at $63.93 a barrel. US oil was off by 68 cents, or 1.1 percent, at $60.74 a barrel. Both contracts fell by more than 6 percent last week.
Germany plans to extend a lockdown to contain COVID-19 infections into a fifth month, according to a draft proposal, after new cases exceeded levels authorities say will cause hospitals to be overstretched.
“The reality is that we’re still a long way from a full demand recovery, and it’s the record levels of withdrawn production capacity that’s the main prop for the oil market,” said Stephen Innes, chief global market strategist at Axi.
The Organization of the Petroleum Exporting Countries and its allies have put in place unprecedented production cuts in a pact to balance global markets after demand plunged during the COVID-19 pandemic.
US drillers are starting to take advantage of an earlier spike in prices on optimism about returning demand, adding the most rigs for extracting oil since January in the week through Friday.
The oil and gas drilling rig tally, an early indicator of future production, rose nine to 411 last week, the highest since April, energy services firm Baker Hughes Co said in its closely followed report on Friday.
The rig count has been rising over the past seven months and is up nearly 70 percent from a record low of 244 in August.
Meanwhile, China’s crude oil imports from Oman and the United Arab Emirates rose 30 percent and 61 percent, respectively, in the first two months of 2021 from the same year-ago period, data from Chinese customs showed on Saturday, as some Iranian barrels were believed to have slipped in.
Data from the General Administration of Chinese Customs showed impor ts from Oman totaled 7.78 million tons and those from the UAE 5.25 million tons during the January-February period.
Reuters reported that Iran has “indirectly” moved record volumes of oil into China in recent months, marked as supplies from Oman, the UAE and Malaysia. Most of the oil ended up in east China’s Shandong province – a hub for the country’s independent refineries.
Saturday’s data recorded zero imports from Iran in the first two months of 2021, versus 668,287 tons a year earlier, due to US sanctions.
China raised total crude oil impor ts in the two months by 4.1 percent over the same period of 2020 supported by firm fuel demand and expanded refining capacity.
Customs data also showed shipments from Saudi Arabia were up 2.1 percent on year at 15.06 million tons, or about 1.86 million bar rels per day (bpd), retaining its position as top supplier.
Imports from second-largest supplier Russia reached 13.93 million tons, or 1.72 million bpd.
Shipments from Brazil, China’s fourth-largest oil supplier for the whole of 2020, fell 36 percent on year to 4.88 million tons.
China brought in 3.42 million tons of US oil in the two-month period, versus zero from a year earlier.