Crude oil prices drifted lower at the first trading session of the week.
The plunge in oil prices is partly attributed to the increased concerns seen by a significant number of oil traders on the world’s energy demand, thus it dampened the latest macro revealing that U.S. President Donald Trump signed off on the latest COVID-19 stimulus deal.
What you should know: At the time of writing this report, Brent crude was down by 0.39% to trade at $51.17 a barrel and West Texas Intermediate futures dropped lower by 0.23% to $48.12 a barrel.
That said, crude oil prices posted their first weekly loss since October as the B.1.1.7 strain of COVID-19, alongside the discovery of another mutant strain of the virus believed to originate from South Africa, which raised more fears of more countries imposing lockdowns.
- The United Kingdom has already imposed tighter lockdown measures throughout most of the country in order to limit the spread of the virus, while the second largest economy, China, suspended passenger flights to the United Kingdom.
- However, macros revealing that President Trump has reportedly signed the $2.3 trillion COVID-19 pandemic aid and spending package, thus averting a partial U.S government shutdown, calmed some nerves in the energy market.
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on macros coming from COVID-19 fronts calming the nerves of oil traders from selling below the $50 price level.
“The oil market rallied along with broader markets supported by a flat-out bullish EIA inventory report.
“And thanks to medical experts warning against overreaction to the new virus strain, there is a greater understanding it will not trigger a new wave of severe lockdown blockades around the world as France showed the way by quickly re-opening trade and transport links with the UK, which provided a major sigh of relief to oil markets for a lockdown perspective.”