Oil prices drop as soaring COVID-19 cases trigger new lockdowns, Bonny Light gains $0.26

Oil prices inched lower on Monday as a persistent rise in coronavirus infections around the world spurred a number of renewed lockdowns as well as new stringent measures in Southern California.

Brent crude oil futures fell by 16 cents or 0.3% to $49.09 per barrel at 02:17 West Africa Time while West Texas Intermediate oil futures dipped by 19 cents or 0.4% to $46.07. The two benchmarks appreciated for the fifth week in a row last week.

Bonny Light, Nigeria’s premium oil grade, jumped by 26 cents or 0.53% to $48.94 at the previous session. Qua Iboe, another key national crude oil grade, appreciated by $1.44 or 3.03% to $48.96.

“Crude pared earlier vaccine roll-out gains after Los Angeles county had another record high in coronavirus cases and South Korea raised their alert level,” Edward Moya, senior market analyst at OANDA said.

“COVID restrictive measures and lockdowns across the globe seem poised to keep crude oil prices heavy in the short-term.”

Read also: Oil prices rise after OPEC+ approves output deal, Bonny Light adds $0.20

New restrictive measures in California, the biggest state economy in the U.S., ordered bars, nail and hair salons as well as tattoo shops to shut down again.

Bavaria, a southern region in Germany, declared on Sunday it would introduce a stricter lockdown from Wednesday until 5^th January just as authorities in South Korea said they would impose heightened physical distancing rules for Seoul, the capital, and its environs, which will last until at least the end of the year.

Last week, U.S. oil and gas companies increased oil and natural gas rigs for the 11^th time in 12 weeks as producers went back to the wellpad although a majority of them are reducing costs this year and in 2021, thus impacting oil prices.

Meanwhile, Iran has directed its oil ministry to get installations ready for production and sale of crude oil at full capacity in three months, said state media on Sunday, a development that could strain oil prices.

“Adding to the pressure on oil prices is the potential Iranian increase to production in three months. Iran is optimistic the U.S. will ease restrictions if they return back to the 2015 nuclear deal,” Moya added.