Oil prices fall due to new concerns about coronavirus as cases in China rise

SINGAPORE (Reuters) – Brent crude oil prices fell $ 1 a barrel on Monday, hit by new concerns about global fuel demand amid strong coronavirus blockages in Europe and new restrictions on movement in China, the second largest oil user in the world, where infections have increased.

Brent crude futures fell 78 cents, or 1.4%, to $ 55.21 a barrel at 0758 GMT, after dropping $ 1 to a session low of $ 54.99 earlier. Brent moved up in the previous four sessions.

The US West Texas Intermediate (WTI) fell 52 cents, or 1%, to $ 51.72 a barrel. WTI reached its highest level in almost a year on Friday.

“Covid’s hot spots burning again in Asia, with 11 million people (in) confinements in the Chinese province of Hebei … coupled with a touch of uncertainty from Fed policy, triggered some profits taken from the gates,” head of global market strategist at Axi said in a note.

Mainland China saw its biggest daily increase in virus infections in more than five months, officials said on Monday, with an increase in new infections in Hebei, which surrounds the capital, Beijing.

Shijiazhuang, the provincial capital and epicenter of the new outbreak, is blocked, with people and vehicles prevented from leaving, while authorities seek to contain the spread.

Most of Europe is now under the strictest restrictions, according to the Oxford rigor index, which tracks measures such as travel bans and closing schools and workplaces.

“Brent’s performance is low after Crown Prince Mohammed bin Salman revealed Saudi Arabia’s future beyond oil and Iraq raised its prices for oil sales to Asia in February,” said Edward Moya, senior market analyst from OANDA.

The Saudi prince unveiled plans on Sunday to build a zero-carbon city on NEOM, the first major construction project for the main $ 500 billion business zone that aims to diversify the economy of the world’s largest oil exporter.

Still, the oil price losses were contained by US President-elect Joe Biden’s plans to announce trillions of dollars in new virus relief accounts this week, much to be financed through larger loans.

Oil prices were supported by Saudi Arabia’s pledge last week of a voluntary cut in oil production of 1 million barrels per day (bpd) in February and March as part of an agreement for most OPEC + producers to maintain stable production during new locks.