Oil prices fall amidst new lockdown fears

Prices fell as much as $ 1 a barrel on Monday, hit by renewed concerns about global fuel demand amid tough coronavirus lockdowns around the world, as well as a stronger US dollar. Brent was down 57 cents, or 1%, at $ 55.42 a barrel around 1205 GMT after previously falling $ 1 to a session low of $ 54.99. U.S. West Texas Intermediate (WTI) slipped 26 cents, or 0.5%, to $ 51.98 a barrel. "The renewed concerns about the demand due to the very high number of new coronavirus cases and further mobility restrictions as well as the stronger US dollar are creating pressure to sell," said Eugen Weinberg, analyst at Commerzbank (DE: CBKG). The number of coronavirus cases worldwide has passed the 90 million mark, according to Reuters. Despite strict national lockdowns, the UK is facing the worst weeks of the pandemic and cases in Germany continue to rise. "The recovery in oil demand is stalling, especially in Europe, due to the ongoing lockdowns. Concerns about Chinese demand are also growing due to the surge in Covid-19 cases in the country as traders fear new lockdowns," said Bjornar Tonhaugen, analyst by Rystad Energy. Mainland China saw the largest daily surge in viral infections in more than five months, as new infections rose in Hebei, which surrounds the capital, Beijing, authorities said. Shijiazhuang, the provincial capital and epicenter of the new outbreak, is cordoned off and people and vehicles are not allowed to leave the city as authorities try to contain the spread. A stronger dollar, supported by hopes of further stimulus programs to boost the world's largest economy, also weighed on oil prices. Oil is typically priced in dollars, so a stronger dollar makes crude oil more expensive to buyers with other currencies. Brent and WTI rose nearly 8% last week, aided by Saudi Arabia's commitment to voluntarily cut oil production by 1 million barrels per day (bpd) in February and March as part of an agreement between most OPEC + producers, to keep production stable. The Saudi cut is expected to push the oil market into deficit for most of 2021, although the tightening will hurt demand, analysts said. Tougher containment measures put in place by European countries are of concern for fuel demand, JBC Energy Research said Monday, but added: "Our projections suggest that this recent Saudi production cut should be enough to keep crude oil fundamentals largely solid hold."