Published: Wed, January 20, 2021
Economy | By

Oil price drops more than 2% over COVID-19

Oil price drops more than 2% over COVID-19

Oil costs fell on Monday, extending losses that final week ended a rally pushed by manufacturing cuts and robust Chinese language demand, with the market's restoration outlook being known as into query as coronavirus infections rise.

On Friday, both United Kingdom and US WTI (West Texas Intermediate) crude oil futures' prices plunged as much as 2 per cent with both oil contracts reporting weekly percentage drops for the first time in three weeks as concerns were mounting over another wave of pandemic outbreak in China after a number of major Chinese cities had been locked down following a recent uptick in pandemic cases.

What you should know: At press time, Brent crude futures dropped by about 1%, to $54.65 a barrel, after losing 2.3% on Friday.

A almost $2 trillion COVID-19 relief package in the United States unveiled by President-elect Joe Biden may increase oil demand from the world's biggest crude consumer.

OANDA senior market analyst Jeffrey Halley was quoted by the news agency as saying: "The Relative Strength Indexes (RSI's) on both contracts were in overbought territory, indicating a correction was on its way".

United States drillers added further pressure by putting more oil and natural gas rigs to work for an eighth consecutive week last week because rising prices have made production more profitable.

"Corona-induced economic fears, a stronger USA dollar and more pessimistic investor sentiment are all playing their part in the fact that Brent is trading. around US$3 lower than last Wednesday", said Commerzbank analyst Eugen Weinberg.

The total operating rigs rose to 287, the highest level since the week ending May 8, 2020.

"Shale producers have indicated they'll proceed to maintain their spending beneath management", ANZ Analysis mentioned in a be aware.

In China, new Covid-19 infections have been increasing, with more than 28 million people under lockdown as the country is trying to control the resurgence of the coronavirus.

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