Oil prices drop amid new coronavirus concerns as cases in China rise

SINGAPORE (Reuters) – Brent crude oil prices fell $ 1 a barrel on Monday, hit by new concerns about global fuel demand amid a coronavirus lockdown in Europe and further restrictions on movement in China, second largest user of oil in the world, where infections have jumped.

Brent crude oil futures were down 78 cents, or 1.4%, to $ 55.21 a barrel at 0758 GMT, after falling $ 1 to a session low of 54.99 $ earlier. Brent has risen in the previous four sessions.

The US West Texas Intermediate (WTI) slipped 52 cents, or 1%, to $ 51.72 a barrel. WTI hit its highest level in nearly a year on Friday.

“The Covid hot spots burning again in Asia, with 11 million people (in) lockdowns in China’s Hebei Province … with a touch of political uncertainty from the Fed, triggered profit taking by the doors, ”Stephen Innes, head of global market strategist at Axi, said in a note.

Mainland China saw its biggest daily rise in viral infections in more than five months, authorities said on Monday, as new infections increased in Hebei, which surrounds the capital, Beijing.

Shijiazhuang, the provincial capital and epicenter of the new outbreak, is on lockdown with people and vehicles banned from leaving, as authorities seek to curb the spread.

Most of Europe is now under the tightest restrictions, according to the Oxford Austerity Index, which tracks measures such as travel bans and closures of schools and workplaces.

“Brent underperforms after Crown Prince Mohammed bin Salman revealed Saudi Arabia’s future beyond oil and Iraq raised prices for crude sales to Asia in February “said Edward Moya, Senior Market Analyst at OANDA.

The Saudi crown prince on Sunday unveiled his intention to build a zero-carbon city at NEOM, the first major construction project for the $ 500 billion flagship trade zone aimed at diversifying the economy of the world’s largest oil exporter.

Yet the oil price losses have been held back by plans by US President-elect Joe Biden to announce billions of dollars in new virus relief bills this week, much of which will be funded by increased borrowing.

Crude prices were supported by Saudi Arabia’s pledge last week for a voluntary 1 million barrels per day (b / d) oil production cut in February and March as part of a agreement for most of the OPEC + producers to keep production stable during the new lockdowns.