Oil prices accelerated their fall on Monday on news of the consequences of the discovery of a new variety of coronavirus in the UK.
By 2:15 p.m. Moscow time, February Brent futures were down $2.63 (5.02%) to $49.63 a barrel on London’s ICE Futures exchange. January futures on WTI had by that time become cheaper on NYMEX by $2.5 (5.09%), to $46.6 per barrel. January contracts are set to expire at market close on Monday.
Market participants fear that the discovery of a new strain of coronavirus will lead to new lockdowns and slow the economic recovery as well as oil demand.
British authorities decided on Sunday to impose maximum restrictive measures on the movement of residents in London and almost the entire southeast of England because of a new variety of coronavirus infection. A number of European countries have limited or completely cut off traffic to the island.
Oil has risen by about 33% since late October on positive news about vaccines from the coronavirus, which supported hopes for a recovery in energy demand next year, Bloomberg writes. In the short term, however, oil prices will continue to be affected by the rapid spread of the disease, which is leading to tighter quarantine measures.
“Oil prices are declining on fears that new restrictions will prevent a recovery in fuel demand,” notes PVM Oil Associates analyst Stephen Brennock. – The road to demand normalization is by no means smooth.”
In addition, as Bloomberg reports, the physical crude oil market is cooling as refiners in Asia reduce purchases after an earlier surge in demand. Last week, Murban crude produced by the Abu Dhabi National Oil Company (ADNOC) traded below the official price on the spot market for the first time since August.