Following losses of more than 3-percent on Monday, oil prices continued to trade lower early on Tuesday, dragged down by renewed concerns about global oil demand as flight bans and lockdowns in Europe are grounding flights and upending travel plans.
While the new U.S. relief package of $900 billion, which Congress passed on Monday, managed to lift equity markets in Europe and the United States on Tuesday, oil prices continued to lose ground as immediate demand fears trumped future prospects of an oil consumption recovery with the advance of vaccinations, particularly as a new strain of Covid-19 has emerged.
As of 9:57 a.m. ET on Tuesday, the WTI Crude price was down 1.79 percent at $47.08 and the prompt Brent Crude prices were approaching the $50.00 a barrel level as they were losing 1.59 percent at $50.13.
The full lockdown in most of southeast England, including London, and the almost complete travel isolation of the UK from other countries, as a result of the new coronavirus strain, continues to weigh on the oil market. Other major economies in Europe, including Germany and Italy, will be on nationwide lockdowns for Christmas.
Due to the new strain of the virus, dozens of countries, including the UK's closest neighbors across the Channel, such as France, have suspended flights from Britain, while France has even closed all its borders with the UK for two days. The European Union and the European Commission are looking at ways to remove the isolation of the UK, with the Commission recommending EU member states lift restrictions on essential travel. However, each EU state decides its own travel policy and border controls.
The chaos with Christmas travel in Europe adds uncertainty about how these latest disruptions would impact oil demand just as the OPEC+ alliance is set to ease their collective cut by 500,000 barrels per day (bpd) as of January.
Despite renewed fears about oil demand due to the new coronavirus strain, the leader of the non-OPEC group in the OPEC+ pact, Russia, is reportedly still in favor of another 500,000 bpd increase in the alliance's oil production from February.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More