Oil is falling as a brand new pressure of coronavirus raises fears of a restoration in demand
© Reuters. FILE PHOTO: Bryan Mound Strategic Petroleum Reserve is seen in an aerial photo over Freeport, Texas
By Sonali Paul and Koustav Samanta
MELBOURNE / SINGAPORE (Reuters) – Oil prices continued to fall Tuesday, adding significant losses from the previous session as a new strain of the novel coronavirus sparked concerns about the recovery in fuel demand in the UK.
The rapidly spreading new strain of coronavirus has closed much of the UK and caused several countries to close their borders to UK travelers and cargo.
Futures fell 54 cents, or 1.1%, to $ 50.37 a barrel at 0531 GMT, while US West Texas Intermediate (WTI) crude oil futures fell 59 cents, or 1.2%, to $ 47.38 a barrel fell.
Both benchmark contracts were down nearly 3% on Monday, partly triggering recent strong gains from the introduction of COVID-19 vaccines, seen as key to easing mobility restrictions.
After the British government warned that a new variant of the virus appeared to be spreading much faster than previous species, India, Pakistan, Russia, Jordan and Hong Kong, along with European countries, continued to travel from the UK and Saudi Arabia, Kuwait and Oman closed their borders completely.
“The pre-Christmas nightmare has begun with a combination of the ‘mutant virus’ compounded by Brexit fears,” said Stephen Innes, chief market strategist at Axi, referring to doubts about UK Prime Minister Boris Johnson a post-Brexit trade agreement with the European Union.
Innes said the oil market was overbought so a sell-off was inevitable.
As the US dollar rises as a safe currency, US dollar-priced oil is also less attractive to buyers in other currencies, which increases price pressure.
“After the euphoria of the vaccine rollout and the false sense of comfort that the coronavirus is disappearing, the advent of the new tribe and the reality of a disorderly Brexit, traders would rather take some profit off the table in the face of the erratic movement of. Markets, “said Avtar Sandu, senior commodities manager at Phillip Futures.
Traders will be closely monitoring the inventory reports due later in the week for clues about the near-term market.
A Reuters poll of analysts, conducted ahead of reports from the American Petroleum Institute on Tuesday and the Energy Information Administration on Wednesday, predicted that US crude oil inventories were likely to have plummeted 3.3 million barrels in the week ending December 18 .
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