Oil Sinks Amid Worries New COVID19 Strain will Hit Demand

Oil prices fell sharply on Monday, amid concerns a more infectious strain of COVID-19 discovered in the U.K. could pose another hurdle for demand of the commodity.

West Texas Intermediate crude for January delivery slid $2.84, or 5.7%, to $46.27 a barrel. On Friday, the contract climbed 1.5% to settle at $49.10 a barrel on the New York Mercantile Exchange — the highest front-month contract finish since Feb. 25, according to Dow Jones Market Data. The January contract will expire at the end of Monday’s session.

February Brent crude the global benchmark, slid $3, or 5.8%, to $49.25 a barrel. Friday’s session saw the contract gain 1.5% to $52.26 a barrel for the highest settlement since Feb. 26.

But concerns over more hits to demand for the commodity came roaring back on Monday, as traders reacted to a highly infectious strain of the virus, being blamed for surging infections in the U.K.

Those living in London and much of the southeast of England have been placed under tighter restrictions ahead of the holidays, shutting nonessential shops and banning nonessential travel. Several European countries and Canada closed their borders to U.K. travelers, including France, which blocked air, sea and land traffic from the country.

Patrick Vallance, the U.K. government’s chief scientific adviser, said that the fast-moving strain had become the “dominant variant,” causing over 60% of London infections by December. Health experts have said there is no evidence so far that shows the strain is more deadly. That strain has also been reported in parts of South Africa.

Fears of fresh lockdowns dragging into the first quarter overshadowed any optimism from news that lawmakers in the U.S. had agreed to a pandemic-relief deal. Senate Majority Leader Mitch McConnell said late on Sunday a bipartisan deal had been reached on an almost $900 billion coronavirus relief package. Lawmakers plan to vote and pass the bill on Monday.

Source: Marketwatch

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