Oil prices fall on surging coronavirus cases and US-China tensions

Oil costs slipped on Monday because the positive affect from Covid-19 vaccines and an OPEC+ deal on oil manufacturing cuts was undermined by surging coronavirus instances and heightened tensions between the United States and China.

Brent crude fell 76 cents, or 1.5%, to $48.49 a barrel by 0911 GMT. US crude was down 82 cents, or 1.8%, at $45.44.

“Surging virus cases and a Reuters report signalling the United States is preparing new sanctions on Chinese officials … outweighed the positive sentiment driven by vaccine news,” mentioned Hussein Sayed, chief market strategist at FXTM.

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Reuters completely reported that the United States was getting ready to impose sanctions on no less than a dozen Chinese officers over their alleged function in Beijing’s disqualification of elected opposition legislators in Hong Kong.

Both oil contracts gained final week after OPEC+, comprising of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, agreed to extend output barely from January however proceed the majority of present provide curbs.

“With the OPEC deal in the bag, now traders looked back at fundamentals, demand and supply, and they were forced to come back to earth as things are not looking good in the short term,” mentioned Bjornar Tonhaugen, head of oil markets at Rystad Energy.

A surge in coronavirus instances globally has compelled a sequence of renewed lockdowns, together with strict new measures within the US state of California and in Germany and South Korea.

Iran, in the meantime, has instructed its oil ministry to organize installations for the manufacturing and sale of crude oil at full capability inside three months, state media mentioned on Sunday.

“Adding to the pressure on oil prices is the potential Iranian increase to production in three months. Iran is optimistic the US will ease restrictions if they return back to the 2015 nuclear deal,” mentioned Edward Moya, senior market analyst at OANDA.