SINGAPORE (Reuters) – Oil prices fell on Monday over renewed concern over global fuel demand amid tight coronavirus shutdowns in Europe and new movement restrictions in China, the world’s second largest oil consumer, after a jump in business there.
Brent crude oil futures fell 42 cents, or 0.8%, to $ 55.57 a barrel at 0146 GMT after rising to $ 56.39 earlier, the highest since February 25, 2020. four sessions rose.
US West Texas Intermediate (WTI) dropped 22 cents, or 0.4%, to $ 52.02 a barrel. WTI rose to its highest level in almost a year on Friday.
“Covid hot spots flare up again in Asia, with 11 million people (in) locks in Hebei Province in China … coupled with a touch of FED policy uncertainty this morning to some extent making a profit out of the gates,” he said. Stephen Innes, head of world market strategist at Axi, said in a note on Monday.
The country’s national health authority on Monday saw its largest daily increase in COVID-19 cases in more than five months, while new infections in Hebei Province, which surrounds the capital Beijing, continued to rise.
Shijiazhuang, the capital of Hebei and the center of the new outbreak in the province, has been locked up with people and vehicles that are not allowed to leave the city while the authorities control the spread of the disease.
Most of Europe is now under the strictest restrictions, according to the Oxford Index of Severity, which assesses indicators such as travel bans and the closure of schools and workplaces.
The oil price losses are still limited by the plans for US President Joe Biden to announce trillions of dollars this week in new coronavirus relief bills, much of which will be paid for by increased loans.
Crude prices are still backed by Saudi Arabia’s promise last week of a voluntary reduction of 1 million barrels per day (bpd) in February and March as part of an agreement under which most OPEC + producers stabilize production will hold during new closures.
“Oil still praises a lot of optimism associated with the rollout of Covid-19 vaccines,” Innes said.
“Demand will always improve as the vaccines roll out, and the supply side is under control thanks to OPEC + and Saudi Arabia’s continued efforts.”
Reported by Jessica Jaganathan; Edited by Christian Schmollinger