Oil Slips With New Coronavirus Strain Threatening Fuel Demand
Bloomberg
Published Dec 22, 2020 04:46PM ET
Updated Dec 22, 2020 07:54PM ET
Oil Slips With New Coronavirus Strain Threatening Fuel Demand
(Bloomberg) -- Oil declined to the lowest in a week amid expectations that a new spreading coronavirus variant and related travel curbs will weaken global fuel consumption already under pressure.
Futures slid 2% in New York on Tuesday. The new Covid-19 strain that emerged in the U.K. is possibly already in Germany, France and Switzerland, officials in those countries said. More than 40 countries are restricting flights and effectively isolating the U.K. In the U.S., the virus has hospitalized almost twice as many Americans as at any point in the pandemic and vaccine doses for most people are still months away.
“This sudden, panicked action by government around the world points to the risk of even more widespread lockdowns and travel restrictions well into the new year,” said Pavel Molchanov, energy research analyst at Raymond James & Associates Inc. “Needless to say, that will slow down the recovery in global oil demand and is weighing on oil prices.”
A stronger dollar is also reducing the appeal of oil, which is priced in the currency.
The threat to near-term demand from additional stay-at-home measures has rippled across oil markets. Brent contracts for prompt delivery are back at a discount against later deliveries -- a bearish pattern known as contango. Gazprom (MCX:GAZP) Neft CEO Alexander Dyukov said global demand for oil liquids is set to return to pre-pandemic levels by early or mid-2022 at the latest.
Investors are also turning attention to U.S. inventories. The industry-funded American Petroleum Institute was said to report a 2.7 million-barrel increase in U.S. oil stockpiles last week, ahead of a U.S. government report on Wednesday.
Meanwhile, the U.S. Congress passed the second-biggest economic rescue package in American history as part of a massive year-end spending bill. The Senate followed the House late Monday in passing by overwhelming margins the $2.3 trillion bill.
©2020 Bloomberg L.P.
Get The News You Want
Written By: Bloomberg
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.