2021.01.2209:31:00UTC+00Oil Prices Tumble As Demand Worries Resurface

Oil prices fell about 2 percent on Friday, retreating further from 11-month highs hit last week as a resurgence of coronavirus infections in China stoked fears about depressed demand for the commodity.

Benchmark Brent crude for March settlement dropped 1.8 percent to $55.07 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were down as much as 2.1 percent at $52.03.

China reported 103 new infections, the country's 11th day with more than 100 confirmed cases, raising worries new pandemic restrictions in the country will curb fuel demand in the world's biggest oil importer.

The upcoming Lunar New Year is expected to be quiet amid new curbs as a result of fresh Covid-19 outbreaks in the capital and across northern China.

The government is building isolation hospitals with thousands of beds in Hebei province, which abuts the capital.

Deaths from Covid-19 hit a new record for the second time this week in Indonesia on Thursday, while case numbers are increasing in Malaysia, Thailand and the Philippines.

Meanwhile, EU leaders are mulling internal border closures due to rising infection and death rates.

The European Union proposed to label hotspots of Covid-19 infections as "dark red" zones, and travelers from those areas will be required to take a test before departure, and undergo quarantine upon arrival at their destination.

Markets now await official oil inventory data from the U.S. Energy Information Administration later in the day for directional cues after the API report showed a surprise 2.6 million barrel increase in U.S. crude inventories last week.

The EIA weekly report has been delayed by two days due to the Martin Luther King Jr. holiday on Monday and the presidential inauguration on Wednesday.