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

SINGAPORE (Reuters) – Oil prices fell on Monday due to new concerns about global fuel demand amid restrictions on coronavirus in Europe and new movement restrictions in China, the world’s second largest oil user, after a jump in cases there.

Brent crude futures fell 42 cents, or 0.8%, to $ 55.57 a barrel at 0146 GMT, after previously rising to $ 56.39, its highest value since February 25, 2020. Brent has risen in previous four sessions.

The US West Texas Intermediate (WTI) fell 22 cents, or 0.4%, to $ 52.02 a barrel. WTI reached its highest level in almost a year on Friday.

“Covid’s hot spots are burning again in Asia, with 11 million people (in) lockdowns in Hebei province, China … along with a touch of uncertainty in the Fed’s policy, has generated a loss of profits through the gates this morning, “Stephen Innes, Axi’s global chief market strategist, said in a note on Monday.

Mainland China saw its biggest daily increase in COVID-19 cases in more than five months, the country’s national health authority said on Monday, as new infections in Hebei province, which surrounds the capital Beijing, continued. increasing.

Shijiazhuang, the capital of Hebei and the epicenter of the new outbreak in the province, is blocked with people and vehicles prevented from leaving the city while authorities act to contain the spread of the disease.

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

Still, the oil price losses were contained by US President-elect Joe Biden’s plans to announce trillions of dollars in new coronavirus aid accounts this week, many of which will be paid for by larger loans.

Oil prices remained 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 under which most OPEC + producers will keep production steady during new locks.

“Oil is still pricing very optimistically related to the launch of Covid-19 vaccines,” said Innes.

“Demand will always improve as vaccines are launched and the supply side is under control thanks to the continued efforts of OPEC + and Saudi Arabia.”