Global oil prices dive amid reduced demand

LONDON—Global oil prices plummeted on Wednesday amid concerns over demand in China, and European gas prices fell to their lowest levels since November 2021 as mild winter weather reduced demand. 

Crude oil prices extended losses from the previous day, falling around 5% on worries about demand from the world's largest oil importer China amid a sharp rise in COVID-19 infections in the country.

“While reliable data appears to be hard to come by, the view seems to be that there will be significant disruption in the coming months and then a rebound from around mid-year, which should then boost demand,” said Craig Erlam, Sr Market analyst at the trading platform OANDA. 

Analysts also pointed to the mild European winter and a rebound in the dollar making crude oil pricier for holders of other currencies. At around 1600 GMT, a barrel of WTI for February delivery fell 4.9% to $73.15 a barrel and the main European contract, Brent for March delivery, was down 4.9% to $78.11. 

Meanwhile, wholesale natural gas prices in Europe fell to their lowest level since November 2021 as mild winter weather reduced demand and wiped out any gains from last year due to the Russian invasion of Ukraine.

Europe's benchmark contract—Dutch TTF gas futures for the coming month—fell 9.3% to hit €65.59 around 1620 GMT, extending losses since the start of the week. 

Equities Rally European equities built on a rally from the previous day, with Paris and Frankfurt closing more than 2% higher after government bond yields fell, gas prices fell and data showed German and French inflation is slowing. 

Stocks in London posted a more modest gain, ending the day up 0.4%. On Wall Street, stocks also edged higher despite worries about the US economic outlook as investors waited for key data expected to provide clues as to where monetary policy is headed.

Briefing.com analyst Patrick O'Hare linked the uptrend to the final day of the so-called Santa Claus rally, a period over Christmas and New Years when stocks typically rise on low trading volume. 

“Today is the last day of this 'rally time' and Santa is hanging by a thread,” he said. Gold hit $1,865.12 an ounce, its highest since June, as traders sought safety in the traditional port commodity.