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Oil Price Drops Over New Coronavirus Strain

Oil price dropped towards $50 a barrel on Tuesday, adding to losses from the previous session, as a new coronavirus strain in the United Kingdom revived concerns over demand recovery.

Reuters reports that detection of the new strain prompted several countries to close their borders to Britain, though a British minister said the UK and France are working to reopen one of Europe’s most important trade routes.

Brent crude was down 43 cents, or 0.8%, at $50.48 a barrel by 1300 GMT, while U.S. West Texas Intermediate (WTI) crude fell 48 cents, or 1%, to $47.49.

Both benchmarks slid nearly 3% on Monday, partly erasing recent gains driven by the rollout of COVID-19 vaccines, seen as key to allowing a return to normal life.

“In the battle between immediate negative concerns and future optimism, the former is now fighting back,” said Tamas Varga of oil broker PVM.

The latest rally culminated in Brent hitting $52.48, its highest since March, on Friday. Some see potential for prices to fall further.

“The environment remains decidedly risk-averse,” said Jeffrey Halley of brokerage OANDA. “Given the scale of oil’s two-month rally, a deeper correction cannot be ruled out.”

 

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