Oil tumbles as new virus strain revives demand fears

By Bozorgmehr Sharafedin LONDON (Reuters) - Oil prices tumbled on Monday 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 $2.23, or 4.3%, at $50.03 a barrel by 1421 GMT, while U.S.

Reuters December 22, 2020 07:05:10 IST
Oil tumbles as new virus strain revives demand fears

Oil tumbles as new virus strain revives demand fears

By Bozorgmehr Sharafedin

LONDON (Reuters) - Oil prices tumbled on Monday 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 $2.23, or 4.3%, at $50.03 a barrel by 1421 GMT, while U.S. West Texas Intermediate (WTI) crude fell $2.21, or 4.5%, to $46.89.

Both contracts had lost as much as $3 earlier in the session, their biggest daily drop in six months.

"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."

Brent climbed above $50 last week for the first time since March, buoyed by optimism stemming from COVID-19 vaccines.

But a new COVID-19 strain, said to be up to 70% more transmissible than the original, has renewed fears about the virus that has killed about 1.7 million people worldwide.

More countries closed their borders to Britain on Monday, causing travel chaos and raising the prospect of UK food shortages.

"The new strain of the coronavirus in the UK has shown us that the vaccine optimism holding Brent above $50 per barrel could be deflated in a fleeting moment," said Rystad Energy analyst Louise Dickson.

The new virus strain has already been detected in other countries, including Australia, the Netherlands and Italy.

Russian Deputy Prime Minister Alexander Novak said the new strain had an impact on oil prices, adding that recovery of global oil markets was happening slower than previously expected and could take two to three years.

The negative sentiment overshadowed the rollout of a new vaccine in the United States, a deal among U.S. congressional leaders for a $900 billion coronavirus aid package and European regulatory approval on Monday for the use of the COVID-19 vaccine jointly developed by U.S. company Pfizer and its German partner BioNTech.

The approval by Europe's medicines regulator puts the region on course to start inoculations within a week.

(Reporting by Bozorgmehr Sharafedin in London; Additional reporting by Yuka Obayashi in Tokyo; Editing by Jane Merriman and David Goodman)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.