UPDATE 7-Oil drops over 2% on China lockdowns, U.S. stimulus concerns

Reuters

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 (Adds settlement prices, weekly change)
    By Jessica Resnick-Ault
    NEW YORK, Jan 15 (Reuters) - Oil prices fell more than 2% on
Friday, with both contracts posting a loss on the week as
concerns about Chinese cities in lockdown due to coronavirus
outbreaks tempered a rally driven by strong import data from the
world's biggest crude importer.     
    Brent fell $1.32, or 2.3%, to settle at $55.10 a barrel.
U.S. West Texas Intermediate crude  CLc1  settled down $1.21, or
2.3%, at $52.36 a barrel.
    Both benchmarks, which hit their highest in nearly a year
earlier in the week, posted their first weekly declines in three
weeks, with Brent down 1.6% on the week and U.S. crude down
about 0.4%.
    While producers are facing unparalleled challenges balancing
supply and demand equations with calculus involving vaccine
rollouts versus lockdowns, financial contracts have been boosted
by strong equities and a weaker dollar, which makes oil cheaper,
along with strong Chinese demand. 
    These positives were called into question on Friday as the
dollar rose and China ramped up lockdown measures. 
    A nearly $2 trillion COVID-19 relief package in the United
States unveiled by President-elect Joe Biden may increase oil
demand from the world's biggest crude consumer.  urn:newsml:reuters.com:*:nL1N2JP30B 
Still, some analysts said the move may not be enough to stoke
demand.  
    "In terms of being able to talk about demand, Asia was the
only bright spot," said John Kilduff, partner at Again Capital
Management in New York. "This renewed lockdown is striking at
the heart of the demand picture in Asia. It's trouble." 
    Crude imports into China were up 7.3% in 2020, with record
arrivals in two out of four quarters as refineries increased
runs and low prices prompted stockpiling, customs data showed on
Thursday.  urn:newsml:reuters.com:*:nL1N2JP07X
    But China reported the highest number of daily COVID-19
cases in more than 10 months on Friday, capping a week that has
resulted in more than 28 million people under lockdown as it
suffered its first coronavirus death on the mainland since
May. urn:newsml:reuters.com:*:nL1N2JQ017
    "The COVID-19 pandemic's spread is taking centre stage again
and traders are getting increasingly worried about the long
duration of European lockdown and about the new restrictions
(in) China," Bjornar Tonnage from Rystad Energy said.
    "The market is structurally bullish, but it may be getting
too ahead of forward-looking fundamentals."

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CHART: U.S. oil may test resistance at $54.19     urn:newsml:reuters.com:*:nL1N2JQ061
CHART: Brent oil may revisit Jan 13 high of $57.42    
 urn:newsml:reuters.com:*:nL1N2JQ02S
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 (Additional Reporting by Noah Browning and Aaron Sheldrick;
Editing by Marguerita Choy, Louise Heavens and Nick Macfie)
 ((Jessica.Resnick-Ault@thomsonreuters.com; +1 332 219 1145;))

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