Oil down over rising Covid-19 cases

LONDON, January 11, 2021 – Oil was down Monday morning in Asia over renewed fuel demand worries as ever-rising numbers of global Covid-19 cases see more countries, most recently in China and Europe, impose strict lockdown measures.

Brent oil futures slid 1.13% to $55.36by 11:11 PM ET (4:11 AM GMT) and WTI futures fell 0.78% to $51.83. However, both Brent and WTI futures remained above the $50 mark.

“Covid-19 hot spots are flaring up again in Asia, with 11 million people [in] lockdowns in China’s Hebei province … along with a touch of FED policy uncertainty has triggered some profit taking out of the gates this morning,” Axi chief global market strategist Stephen Innes said in a note.

China, the second-largest oil user globally, saw its biggest daily increase in Covid-19 cases in more than five months, the country said on Monday. The growing number of new infections in Hebei province which surrounds Beijing continued to rise, contributing to the surge. Hebei’s capital Shijiazhuan is now the epicenter of a new outbreak in the province, with authorities imposing lockdown measure barring people and vehicles form leaving the city.

Most of the European continent also remains under strict lockdown, with the number of global Covid-19 cases surpassing 90.2 million as of Jan. 11, according to Johns Hopkins University data.

However, US President-elect Joe Biden’s pledge to announce trillions of dollars in new Covid-19 relief measures later in the week capped the black liquid’s losses. Much of these measures will be paid for by increased borrowing.

Saudi Arabia’s pledge during the previous week to voluntarily cut its oil output by 1 million barrels per day (bpd) in February and March, also continued to support crude prices. The cut is part of a deal that sees most Organization of the Petroleum Exporting Countries and allies, or OPEC+, countries hold production levels steady.

“Oil is still pricing in a great deal of optimism linked to the rollout of Covid-19 vaccines … demand will always improve as the vaccines roll out, and the supply side is under control thanks to OPEC+ and Saudi Arabia’s continued efforts,” Axi’s Innes said.

First published on Investing.com

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