Crude oil prices dipped due to oil traders being jittery over rising global cases of COVID-19, despite hopes of effective vaccines.
Crude oil prices dropped at the first trading session of the week.
The plunge is largely attributed to the continual rise in COVID-19 cases globally, as oil traders got jittery on the bias that the new series of renewed lockdowns put in place in the United States, would restrict the free flow of demand at the world’s leading oil consumer.
What we know: At about 6.34 am West African time, Brent crude oil futures dropped 0.49% and was trading at $49.01 a barrel while the U.S based oil contract, West Texas Intermediate oil futures lost about 0.52%, to trade at $46.02 a barrel.
- However, both major oil benchmarks printed gains for a fifth consecutive week last week.
- Oil traders are presently nervous about the prevailing circumstances surrounding COVID-19 restrictive measures and lockdowns in key international markets as such moves seem poised to keep crude oil prices under pressure at least for the near term.
In America’s most powerful economic region, there were restrictions in key centers around California that include restaurants, hair, nail salons, and tattoo shops.
Stephen Innes, Chief Global Market Strategist at Axi spoke on the prevailing fundamentals distorting crude oil bulls from breaking above the $50/barrel.
Some of the shine is coming off the OPEC rally as the reality of Xmas lite sets in with the bulk of Californians, one of the US’s biggest road fuel demand states, are set to enter wide-sweeping new virus lockdowns.
“Oil being a prompt contract, it does not have the luxury to look through “Grinchy” holiday season-imposed lockdowns, like other forward-looking assets.
“Prices gained after the OPEC meeting. An agreed outcome appeared to be the key, and that is what we got, although I am not sure this was a widely expected scenario,” Innes said.
What to expect: It is anticipated that the prevailing macro surrounding crude oil price action to remain on course at least for the near term after the market spends some time digesting the latest wide-sweeping new virus lockdown in California.