Oil fell for a third day as U.S. crude stockpiles grew and concerns mounted that a rapid surge of infections in China would slow demand in one of the world’s top oil importers.

West Texas Intermediate fell as much as 2.8 per cent before paring losses to settle near US$78 a barrel. U.S. crude inventories rose by a modest 718,000 barrels last week.

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The U.S. will require airline passengers from China to show negative virus tests, while Italy will begin testing travelers from the Asian nation on arrival. That’s overshadowing optimism over a longer-term demand recovery in China.

Trading volumes have been thin this week. Crude is heading for the first back-to-back quarterly loss since 2019 after a volatile year that saw futures surge following Russia’s invasion of Ukraine before retreating as concerns over a global economic slowdown mounted.

“Volatility is likely going nowhere fast as we navigate another highly uncertain year, albeit one that surely promises plenty of surprises and twists and turns along the way,” said Craig Erlam, senior market analyst at Oanda. 

Prices:

• WTI for February delivery dropped 0.7 per cent to settle at US$78.40 a barrel in New York.
• Brent for February settlement, which expired Thursday, declined 1.2 per cent to US$82.26 a barrel.