Oil prices fell nearly 3% on Monday as stricter measures taken against a rapidly spreading new strain of coronavirus in the UK and some European countries fueled concerns of a slowing recovery in fuel demand.
Strict isolation practices following a new strain of coronavirus in Britain and travel restrictions in other European countries have increased tensions. Many European countries have stopped flights with the UK.
Brent crude slid $1.54, or 3.0%, to $50.72 a barrel by 0510 GMT after rising 1.5% and touching its highest since March last Friday.
West Texas Intermediate (WTI) crude was down $1.42, or 2.9%, to $47.68 a barrel after also climbing 1.5% on Friday to its highest level since February.
Monday’s declines have been despite the launch of COVID-19 vaccines and last week oil prices surged for seven consecutive weeks.
Brent may drop below $ 50 a barrel this week and WTI below $ 45 as investors will want to adjust their positions ahead of the Christmas holidays.
British Prime Minister Boris Johnson will preside over an emergency response meeting on Monday to discuss international travel and freight flows in and out of the UK as COVID-19 cases have increased in a record number over the course of a day. This booming headache came just as he was trying to make a final deal on Brexit.
With progress in vaccine rollouts, money managers had raised their net long U.S. crude futures and options positions in the week to Dec. 15, according to the U.S. Commodity Futures Trading Commission (CFTC).
The oil market has shown an upward trend over the past month, ignoring the negative factors. There has been an optimism that an expanding vaccine implementation will stimulate global growth, but investors’ promising prospects for 2021 have suddenly disappeared due to a new virus variant.
This negativity also overshadowed the agreement between US congressional leaders for a $ 900 billion coronavirus aid package.
Another factor that will drive prices down is that the number of oil and gas drilling rigs, an early indicator of future production, rose to 346, up eight a week, the highest level since December 18.
Meanwhile, Russian Deputy Prime Minister Alexander Novak said on Saturday that global oil demand is still below pre-crisis levels of between 6 and 7 million barrels (barrels) a day.