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Oil falls $3 as new virus strain prompts demand worries

CoronavirusDec 21, 2020 05:50AM ET
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© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub

By Bozorgmehr Sharafedin

LONDON (Reuters) -Oil prices tumbled by $3 on Monday, their biggest daily fall since June, as a fast-spreading new coronavirus strain that has shut down much of Britain and led to tighter restrictions in Europe sparked worries about a slower recovery in fuel demand.

Brent crude was down $3.00, or 5.7%, to $49.26 a barrel by 1028 GMT, and U.S. West Texas Intermediate (WTI) crude was down $2.92, or 6%, to $46.18 a barrel.

"Reports of a new strain of the coronavirus has weighed on risk sentiment and oil. New mobility restrictions across Europe are also not helping as European oil demand will suffer," said UBS oil analyst Giovanni Staunovo.

"Investors need to be mindful that the road to higher oil demand and prices will remain bumpy," he added.

Brent climbed above $50 last week for the first time since March amid optimism stemming from the rollout of COVID-19 vaccines.

But a new COVID-19 strain, said to be up to 70% more transmissible than the original, has led European countries, Israel and Canada to shut their borders with the UK. Hong Kong is due to ban all flights arriving from the UK from midnight.

"The message is clear: oil prices are still very much and will continue to be at the mercy of the pandemic," said Stephen Brennock of oil broker PVM.

The negative sentiment completely overshadowed a weekend deal among U.S. congressional leaders for a $900 billion coronavirus aid package.

Adding to pressure, the U.S oil and gas rig count, an early indicator of future output, rose by eight to 346 in the week to Dec. 18, the highest since May, Baker Hughes said, reflecting crude prices that have traded above $45 a barrel since late November.

Russian Deputy Prime Minister Alexander Novak said on Saturday that global oil demand was still 6-7 million barrels per day (bpd) below pre-crisis levels.

Oil falls $3 as new virus strain prompts demand worries
 

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Comments (5)
beez waxxxxx
beez waxxxxx Dec 21, 2020 10:34AM ET
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its the flu boycott chinese goods
Ernest Wong CA
Ernest Wong CA Dec 21, 2020 10:34AM ET
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bet that you are a small time trader
Söder Fråga
Söder Fråga Dec 21, 2020 6:20AM ET
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Politicians before: only vaccine will stop the restrictionsPoliticians now: actually vaccine ain't helping at all and also here is new version of covid because you fear it not enough
Nata Hook
Nata Hook Dec 21, 2020 6:20AM ET
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Or listen to a doctor
Robert DZ the patterns
Robert DZ the patterns Dec 21, 2020 5:55AM ET
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they've got virus mutation now, LOL. This system is good, so now new vaccine for i.dio.ts
Harry Wilson
Harry Wilson Dec 20, 2020 10:12PM ET
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More fear mongering
Emil Miclea
Emil Miclea Dec 20, 2020 9:49PM ET
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Kazuhiko Saito pless reflext that is your opinion not relfecting the opinion that many top anylists believie that crude oil will spike by the summer of 2021 . This by no means changes anything
 
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