WTI Crude Oil Eases Lower as Fears of Lockdowns Return
WTI crude oil prices are trending lower in early trading on Tuesday, as investor sentiment takes a hit from an uptick in COVID-19 infections being reported across Europe, bringing the pandemic and its potential impact on economic recovery back in focus. At the time of writing, WTI crude oil is trading at around $81.40 per barrel.
Europe could soon implement lockdowns and restrictions once again in the wake of a steady increase in cases. Austria has become the first European nation to announce a lockdown; however, only for people who have not yet been fully vaccinated against COVID-19. The Netherlands has imposed a partial lockdown while German political leaders are planning to meet next week to discuss possible restrictions to contain the spread of infections.
Meanwhile, fresh outbreaks of the delta variant across China has prompted the country to impose tighter lockdown measures, quarantines and travel restrictions. Russia has also been facing a rise in COVID-19 infections lately. This is especially worrying for crude oil’s outlook as these regions are among the ones that have vaccinated a large portion of their populations and are among the leading energy consumers. Bringing back lockdowns could curb oil demand and bring down crude prices in turn.
Also weighing on crude oil is OPEC’s decision to reduce its global oil demand forecast for the current quarter by 330k bpd in the wake of the latest outbreak of COVID-19 cases in key markets. The leading oil producing nations of the world anticipate a decline in oil demand as a result of rising energy prices as countries struggle with economic recovery from the coronavirus crisis.
Crude oil is also facing pressure on account of a strengthening in the US dollar in recent sessions. A strong dollar makes oil more expensive for holders of other currencies to purchase, further driving down its demand and keeping its price weak as a result.
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