Oil rig, oil field
Moscow this week banned exports of Russian crude oil and refined products to foreign buyers that adhere to the price cap. Image Credit: Shutterstock

Dubai: Oil extended losses on concerns that China’s rapid dismantling of its Covid Zero policy could lead to a surge in cases across the world.

West Texas Intermediate fell toward $78 a barrel after closing 0.7 per cent lower on Wednesday. The US will require airline passengers from China to show negative virus tests, while Italy will begin testing arrivals from the Asian nation. That’s overshadowing optimism over a longer-term demand recovery in China.

“The removal of travel restrictions could precipitate another global outbreak,” said John Driscoll, director of JTD Energy Services Pte in Singapore. “It raises the potential of a demand hit and flattening prices.”

Crude is heading for the first back-to-back quarterly loss since 2019 after a volatile year that saw futures surge following Russia’s attack on Ukraine before retreating as concerns over a global economic slowdown mounted. A lack of liquidity has exacerbated price swings this year.

Meanwhile, the industry-funded American Petroleum Institute reported US commercial crude inventories fell by 1.3 million barrels last week, according to Dow Jones. Stockpiles at the storage hub at Cushing, Oklahoma, also shrunk, although gasoline and distillate supplies expanded.