Oil prices decline as coronavirus cases surge in China

Gulf Today Report

Oil prices slipped on Monday due to worries about global fuel demand as coronavirus restrictions across Europe toughens and China imposes restrictions due to jump in cases.

Brent crude oil futures were down 65 cents, or 1.2%, at $55.34 a barrel while US West Texas Intermediate (WTI) slipped 44 cents, or 0.8%, to $51.80 a barrel.

In a note, Stephen Innes, chief global market strategist at Axi said: "covid hot spots flaring again in Asia, with 11 million people (in) lockdowns in China's Hebei province...along with a touch of Fed policy uncertainty, has triggered some profit taking out of the gates."

Shijiazhuang, China’s epicentre of the new outbreak is currently under lockdown. According to the Oxford stringency index, most of Europe is currently under strict restrictions. 

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"Brent is underperforming after Crown Prince Mohammed bin Salman revealed Saudi Arabia's future beyond oil and Iraq increased their pricing for crude sales to Asia in February," said Edward Moya, a senior market analyst at OANDA.

However, US President-elect Joe Biden’s plan to announce new virus relief bills later in the week has curtailed oil price loss.

Crude prices were supported by Saudi Arabia's pledge last week for a voluntary oil output cut of 1 million barrels per day (bpd) in February and March as part of a deal for most OPEC+ producers to hold production steady during