Oil fell the most in seven weeks. Investors fled the market as a modification of coronavirus discovered in the United Kingdom threatened more lockdowns across Europe. The precious metal also lost most of its early gains. It is under pressure from a rising greenback as fears of a new coronavirus strain roiled markets.
Furthermore, Copper and other industrial metals prices declined as the greenback became strong. The U.S. dollar index rebounded from multi-year lows by 0.5% and settled at 90.43.
The dominant cryptocurrency Bitcoin, which has an inconsistent relationship with the traditional market, fell by 6 percent on December 21.
Brent futures earlier fell below $50 a barrel, at one stage dropping about 6 percent. Over 16 million British people must stay at home after a full lockdown in London and England’s southeast. Several countries, including India, have delayed flights from Britain.
Meanwhile, physical oil prices are cooling as Asian refiners reduce purchases after an earlier-than-usual buying spree. Last week, Abu Dhabi’s Murban crude traded on the spot market under its official rate for the first time since August. Besides, differentials for Russia’s ESPO and the Urals have also fallen. The structure of the futures curve declined Monday, showing supply concerns.
Prices hit as the fast-spreading virus leads to more stay-at-home orders
Since the end of October, crude has rallied by about a third on a series of vaccine inventions. They increased expectations for a revival in energy demand next year. However, in the short term, prices are hit as the fast-spreading virus leads to more stay-at-home orders.
According to Stephen Brennock, PVM Oil Associates analyst, oil prices are weakening because the new strain will derail the fuel demand improvement.
Spot gold boosted by 0.04 percent. It settled at $1,881.14 an ounce, after having earlier hit its highest since November 9 at $1,906.46.
Benchmark copper on the London Metal Exchange declined to approximately 1.5% and settled at $7,860 a tonne. Copper had rallied to $8,028 a tonne last week. Its highest level since 2013. Strong demand in China, government stimulus, and coronavirus vaccines’ rollout prompted speculators to pile into the market.
According to Carsten Menke, Julius Baer analysts, it is a classic risk-off move caused by this virus’s mutation.
Additionally, cryptocurrencies also saw a loss. Bitcoin declined by 5.5% at $22,156 after reaching a record $24,298.04 on Sunday. Smaller coins like Ethereum and XRP, which normally trade in tandem with Bitcoin, dropped 5.9% and 9.2%, respectively.