Oil prices hit new coronavirus stress sparks travel restrictions

Oil prices fell on Monday after a new strain of coronovirus discovered in Britain led to new travel restrictions across Europe raising concerns that more lockdowns could occur globally.

Internationally, Brent crude oil fell 2.6% to $ 50.91 a barrel. Futures tied to West Texas Intermediate, the main Texas crude gauge, fell 2.8% to $ 47.74 a barrel.

While prices rebounded slightly from the day’s lows, the drop was the sharpest since November 6, winning five seasons for both Brent and WTI.

The demand for oil is likely to take a fresh hit in the UK following a new coincidence of taboo travelers on Sunday to prevent the spread of a highly contagious new strain of Kovid-19 in England. The UK government said the new strain appeared to be spreading 70% faster than earlier mutations, and it imposed strict restrictions on parts of the country, including London.

“The new version of the virus and new travel restrictions have again raised concern,” said Norbert Rauker, head of commodity research, Jüller Bayer..

“The road has its bumps back to normal and it seems the latest.”

Shares of major European oil companies also declined on Monday. BP PLC declined 4.9%, SE overall fell 3.7%, and Royal Dutch Shell — which said on Monday that it would reduce its assets by $ 4.5 billion — fell 5%.

The optimism associated with the coronavirus vaccine and a rebound in Chinese economic activity led to a sharp rally in oil prices in recent weeks. Brent reached its highest level last week since early March.

Those gains have come despite warnings from the International Energy Agency that it would be several months before vaccination began to boost global oil demand. The IEA said last week that rising transition levels and fresh restrictions have led to a drop in crude oil consumption in some wealthy European and North American countries.

The latest measures, along with the cancellation of flights from several major countries, the UK, give European oil demand a new setback. According to Tamas Varga, an analyst at PVM Oil Associates, traders have been betting on rising prices in recent weeks.

“I don’t believe that the market has yet to turn such a downturn that people are ready to sell short, but the recession you are seeing right now is probably going to intensify,” Mr. Varga said. Still, the rollout of vaccination “would probably put a floor under prices,” he said.

France, Israel and Canada are some of the countries that have stopped travelers from Britain in an effort to overcome the highly contagious new strain of coronovirus that is spreading rapidly in England. Photo: Getty Image

Write David Hodari at [email protected]

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