COVID-19 mutant strain causes chaos at Oil markets

Crude Oil prices dropped deeper at the second trading session of the week in London.

This is coming after heavy losses from the Monday trading session, as a new strain of COVID-19 virus shutdown major economies in Western Europe.

READ: Vaccine, Backwardation and OPEC+: Hope for oil?

The fast-spreading new COVID-19 strain has already shut down a larger part of the United Kingdom and also prompted many countries to close their borders to English travellers and in some cases their goods.

• At the time of writing this report, Brent crude futures were down more than 2% trading below $50/barrel.
• U.S. West Texas Intermediate (WTI) crude futures also lost over 2%, to trade at $46.73 a barrel.

READ: NASDAQ down 2%, Tesla loses over 12%

Both major benchmark contracts plunged by 3% yesterday, partly wiping recent strong gains on the back of the rollout of COVID-19 vaccines, seen as key to easing human mobility restrictions.

What you should know about the oil price flux

Stephen Innes, Chief Global Market Strategist at Axi, further dug deeper into recent macros weighing heavily on oil prices,

• “Oil slid and then finally crashed off the end of the reflation runway before bargain hunters helped lift Brent crude back above $50.00. The nefarious mobility restriction linked sell-off saw both grades drop about 6% amid the new super -spreading strain of the virus, which sees politicians mandating more mobility restrictions in most of Europe. And with the UK at the epicentre, it triggered absolute border pandemonium.”

READ: Covid-19: Nigeria considers international travel ban as new strain gains momentum

What to expect

Oil traders anticipate significant sell-offs at today’s Oil trading session as all those bullish synergies around reflation and a weaker US dollar are reversing a touch with the latest chaos in the UK on the back of the mutant strain of the virus.

READ: Oil marketers say non availability of forex still affecting importation of petrol