Oil prices decline with the increase in Coronavirus pandemic cases

Mohammed Abdelkhalik
December 8, 2020
oil prices

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Oil Prices Outlook – 8th December 2020

Oil prices witnessed a decline during trading today, Tuesday, in the European session, to record the second consecutive daily decline.

This decline is due to the continuing activity of corrections and profit-taking after it recorded its highest level in nine months earlier in the commodities trading, in addition to increasing concerns about global demand rates On oil, in light of the escalation of the rate of infection with the Coronavirus again in Europe and the United States and the increase in closure measures related to its spread.

At 08:20 GMT, Brent crude fell by 0.8%, equivalent to 40 cents, to reach the price of a barrel at 48.39 dollars from the opening price of the session at 48.62 dollars, while West Texas crude fell by 0.8%, equivalent to 35 cents, to reach the price of a barrel at $ 45.41 from the opening price of the session at $ 45.62.

By the end of Monday’s trading, West Texas crude lost about 1.1% in its first daily decline, with corrections and profit-taking activity after it recorded its highest price in nine months at $ 46.66 on Friday, and Brent crude fell by 0.9% from its highest level since March at $ 49.84.

Chart of USOIL - Oil Prices - 8th December 2020
Oil prices affect lockdown measures extended as new cases occur

Increasing in renewed coronavirus cases in the United States and Europe has triggered a set of draconian lockdown measures, including strong measures in California, Germany, and South Korea.

The renewed severe unrest due to the outbreak of the second wave of the Coronavirus epidemic at a rapid pace in the United States and Europe, which negatively affects investor sentiment towards the rates of global oil demand, the governor of California demanded yesterday, Monday, that citizens stay in their homes and close shops and entertainment places for a period of three weeks at least.

Informed sources said that the French government may extend the closure procedures until next week, especially with the indicators of the declining rate of new cases of the virus not declining.

On the other hand, investors are closely watching US efforts to approve a new stimulus package, which is necessary to drive job growth, which affects the rate of energy demand.

Oil prices rebounded last week on the back of plans to launch vaccines and the OPEC Plus agreement to curb supply increases, as investors monitored efforts to agree to a new economic stimulus package.

OPEC Plus will likely hold its next meeting on January 4 after it was agreed last week to increase oil production by 500,000 barrels per day next month, and the American Petroleum Institute is expected to release last week’s inventory report later in the day.

Author Mohammed Abdelkhalik

Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.