Crude Oil Sheds 3 Percent on Rising U.S. Dollar and COVID-19 Restrictions

Crude oil prices declined by 3 percent on Monday during the Asian trading session as rising U.S. Dollar and COVID-19 related restrictions are predicted to halt global oil recovery.

Brent crude oil, against which Nigerian oil is priced, declined by $2.43 or 3.5 percent to $68.27 a barrel at 9:50 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude fell by $2.41 or 3.6 percent to $65.87 after dropping nearly 7 percent last week.

“Concerns about potential global oil demand erosion have resurfaced with the acceleration of the Delta variant infection rate,” RBC analyst Gordon Ramsay said in a note.

Experts are pointing to new restrictions in China, the world’s second-largest crude oil consumer as a major factor weighing on the global oil market in the third quarter.

Restrictions include flight cancellations, warnings by 46 cities against travel and limits on public transport and taxi services in 144 of the worst-hit areas.

China reported 125 new COVID-19 cases on Monday, up from 96 reported on Sunday. In Thailand and Malaysia infections rose to daily records.

“While the number of cases (in China) is low, it comes just as the summer travel season peaks,” ANZ commodity analysts said in a note. “This has overshadowed signs of strong demand elsewhere.”