NEW YORK: Oil fell nearly 5 percent on Wednesday after slumping in the previous session, weighed down by demand concerns stemming from the state of the global economy and rising COVID cases in China.

Brent futures fell $3.75 to $78.35 a barrel for a 4.6% loss by 1:02 a.m. EST (1802 GMT). US crude dropped $3.57, or 4.6%, to $73.36.

Both benchmarks also plunged more than 4% on Tuesday, with Brent posting its biggest daily decline in more than three months.

“The energy complex is furthering yesterday’s sharp decline in kicking this new year off on an extremely weak note,” said Jim Ritterbusch or Ritterbusch and Associates, who added that China’s COVID-19 cases were among the top drags on oil prices.

Data from China showed that while no new variant has been found there, the country has under-represented how many people have died in its recent rapidly spreading outbreak, World Health Organization officials said.

The state of the global economy and central bank rate hikes also weighed on crude prices. “Worries about the state of the global economy are front and center of traders’ minds and will remain so for the foreseeable future,” said PVM Oil analyst Stephen Brennock. US manufacturing contracted further in December, dropping for a second straight month to 48.4 from 49.0 in November, in the weakest reading since May 2020, the Institute for Supply Management (ISM) said.