New Type of COVID-19 Weighs on Crude Oil Price

The price of Brent crude oil declined by 97 cents or 1.9 percent to $51.29 per barrel on Monday during the Asian trading session after reaching its highest since March on Friday.

Brent crude oil against which Nigerian oil is priced slid on fast-spreading new COVID-19 strain in the United Kingdom as concerns that latest restrictions in there and other European countries could halt ongoing global recovery and demand for crude oil.

The fall in oil price came after the commodity has risen for seven straight weeks following the approval of Pfizer and BioNTech vaccine in the United Kingdom and now in the United States.

However, the new type of COVID-19 in the United Kingdom, which officials say is 70 percent more transmissible than the original, forced the rest of European nations to start closing their doors to travelers from the United Kingdom. The restrictions could slow down demand for crude oil in the region and force investors to cut down on long positions.

“A new variant of the coronavirus in Britain and tighter travel restrictions in Europe sparked fears over slower economic recovery, prompting investors to unwind long positions,” said Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co.

“The oil market has been on a bull trend in the past month or so, ignoring negative factors, amid an optimism that a widening vaccine rollout would revive global growth, but investors’ rosy expectations for 2021 have suddenly vanished,” Saito said.