Oil dips as COVID cases, lockdowns outweigh vaccination news
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[December 08, 2020] By
Julia Payne
LONDON (Reuters) - Oil prices fell on
Tuesday, adding to the previous session's losses after California
tightened its pandemic lockdown through Christmas and coronavirus cases
surged in the United States and Europe.
Brent crude futures fell 26 cents, or 0.53%, to $48.53 a barrel by 1127
GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 25
cents or 0.55%, to $45.51 a barrel. Both benchmark contracts lost around
1% on Monday.
Oil prices were briefly buoyed after the world's first fully-tested
COVID-19 vaccine shot was administered to a grandmother in Britain, but
investors quickly returned to focus on ebbing fuel demand.
Globally, a sharp rise in coronavirus cases has led to a string of
renewed lockdowns, including strict measures in California, 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," said Lachlan Shaw, National Australia Bank's head
of commodity research.
California on Monday required most in the state to close shop and stay
at home under a new order that will last at least three weeks.
France may have to delay unwinding some lockdown restrictions next week,
government sources said, after signs the downward trend in new cases had
flattened out after shops were allowed to reopen late last month.
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General view of oil tanks and the Bayway Refinery of Phillips 66 in
Linden, New Jersey, U.S., March 30, 2020. REUTERS/Mike Segar
Analysts said they were closely watching U.S. lawmakers' efforts to
approve a new economic stimulus package. The stimulus will be needed to
drive jobs growth, and, in turn, energy demand.
"As supply expectations are now firmer after the OPEC+ meeting, at least
for January, prices are not expected to deviate much for a while and
swings will be focused on ‘lighter’ market events, even if these are
mostly of psychological value – such as the first vaccinations in the
UK," Bjornar Tonhaugen, head of oil markets at Rystad Energy, said.
OPEC+ is likely to hold their next meeting on Jan. 4, after agreeing
last week to raise oil output by 500,000 barrels per day (bpd) next
month.
Data due from the American Petroleum Institute on Tuesday and from the
U.S. government on Wednesday is expected to show that U.S. crude stocks
fell last week, while refined product stockpiles rose, according to
estimates from five analysts polled by Reuters.
(Reporting by Sonali Paul and Roslan Khasawneh; Editing by Lincoln Feast
and John Stonestreet)
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