Oil prices fall further amid soaring COVID-19 cases; Bonny Light gains $0.04

Oil prices declined on Tuesday, compounding losses recorded at the previous session that came as California made its pandemic lockdown measures stricter through Christmas and coronavirus infections continued to rise in the U.S. and Europe.

Brent crude futures dived by 51 cents or 1.1% to $48.28 per barrel by 08:44 West Africa Time jut as West Texas Intermediate (WTI) crude futures dropped by 45 cents or 1% to $45.31. Both benchmarks depreciated by about 1% on Monday.

Bonny Light, Nigeria’s principal oil grade, added 4 cents or 0.08% to close at $48.98 at the Monday session. Qua Iboe, another major national grade, depreciated by 67 cents or 1.38% to $47.81 in early trade on Tuesday.

A steep increase in coronavirus cases around the world has spurred a series of lockdowns, including stringent measures in California as well as Germany and South Korea.

“The pandemic situation is continuing to be very disruptive in quite a few places in the U.S. and parts of Europe. That’s impacting sentiment on demand near term,” Lachlan Shaw of National Australia Bank said of oil prices.

On Monday, California requested most of the state to shut down and stay at home under a new order which would for a minimum of three weeks, a move likely to impact oil prices.

“California, one of the U.S. largest road fuel demand states, will be in lockdown lite through what is bound to be a Christmas lite for the oil markets,” Stephen Innes, chief market strategist at Axi, told Reuters.

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

Sources close to the French government said France could delay lifting some lockdown curbs next week following indications that the fall in new cases had plateaued out after shops were permitted to restart business in November.

Following last week’s rebound in oil prices on account of rollout strategies and a deal by the Organisation of the Petroleum Exporting Countries (OPEC) and its Russia-led allies, a grouping called OPEC+, to suspend output increases, analysts stated that they were meticulously monitoring efforts by the U.S. lawmakers to endorse a fresh economic stimulus package.

The stimulus is crucial to job creation and, by extension, energy demand.

“For the moment, the market is happy to look past these issues as the vaccine rollout begins; however the economic headwinds are building in the short term,” ANZ Research said in a note.

Figures to be released by the American Petroleum Institute later on Tuesday and from the U.S. government on Wednesday is anticipated to reveal that U.S. crude inventories dropped last week, which may drive oil prices, while refined product stockpiles increased, according to estimates from five analysts polled by Reuters.

The U.S. dollar also impacted commodity prices after appreciating against a basket of currencies.