Oil prices fall after China cuts import quotas

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An aerial view shows the Shibushi National Oil Storage Base in Kagoshima Prefecture, Japan, Jan. 18, 2019, in this photo taken by Kyodo. Mandatory Credit Kyodo / via REUTERS

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  • China cuts 2022 crude import quotas by 11% – sources
  • US crude fuel inventories fell last week; production increases -EIA
  • Saudi King Says OPEC + Pact “Essential” for Oil Market Stability

LONDON, Dec. 30 (Reuters) – Oil prices fell on Thursday after the world’s largest importer, China, reduced the first batch of crude import allowances for 2022, offsetting the impact of U.S. data showing that fuel demand had been maintained despite the surge in Omicron coronavirus infections.

Brent crude futures fell 52 cents, or 0.7%, to $ 78.71 a barrel at 1022 GMT. US West Texas Intermediate (WTI) crude futures fell 59 cents, or 0.8%, to $ 75.97 a barrel after six straight sessions of gains.

Oil prices reduced their earlier gains after China, the world’s largest importer of crude, slashed the first batch of 2022 import quotas to mostly independent refiners by 11%.

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“Market sentiment has weakened over fears that the Chinese government will take tougher measures against teapots,” said a Singapore-based analyst, referring to independent refiners.

Global oil prices rebounded from 50% to 60% in 2021 as demand for fuel returned to near pre-pandemic levels and significant production cuts by the Organization of the Petroleum Exporting Countries and China. its allies (OPEC +) for most of the year wiped out a glut of supply. Read more

US Energy Information Administration data on Wednesday showed crude oil inventories fell 3.6 million barrels in the week to December 24, more than analysts polled by Reuters had foreseen.

Gasoline and distillate inventories have also fallen, compared to analysts’ forecasts for constructions, indicating that demand has remained strong despite record cases of COVID-19 in the United States.

Oil prices have also been supported by measures taken by governments to limit the impact of record COVID-19 cases on economic growth, such as relaxing testing rules. Read more

OPEC + will meet on January 4 to decide whether to continue increasing production in February.

Saudi Arabia’s King Salman said on Wednesday that the OPEC + production agreement was necessary for the stability of the oil market and that producers must comply with the pact. Read more

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Reporting by Dmitry Zhdannikov, Sonali Paul and Florence Tan; edited by Richard Pullin, Himani Sarkar and Barbara Lewis

Our Standards: Thomson Reuters Trust Principles.

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