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Oil prices fell sharply on Monday afternoon in one of the worst trading days for the commodity since the day in May 2020 when WTI slipped into negative territory.

WTI was trading down 5.22% around 2 p.m. on Monday, $3.24 per barrel down for the day at $58.21. The Brent benchmark was trading down 4.81% on the day, or $3.12 down per barrel at $61.79.

The volatile price action was largely the result of oil demand fears. The U.K. announced that it may continue to ban foreign travel beyond the May 17 date if coronavirus infections continue to ramp up around the world.

Also weighing on prices is a surge in coronavirus cases in India—a major oil importer. India reported on Monday the highest number of new daily Covid-19 cases since the pandemic began, triggering a lockdown in its largest city of Mumbai. This could threaten fuel demand.

Iran and the United States are also set to meet this week to discuss the possible return to the nuclear deal. If negotiations are successful, this could mean that there will be an increase in the amount of crude oil being supplied by Iran, which is currently being stifled by U.S. sanctions.

OPEC+ has already agreed to ramp up oil production beginning in May. While the general consensus is that the market will absorb the additional barrels, most analysts had anticipated a rolling over of the current level of production cuts. Despite this market shock last week, prices did not immediately react.

In a show of faith in the restoration of the supply and demand situation, Saudi Arabia raised its official selling price of crude to its most prized market, Asia.

By Julianne Geiger for Oilprice.com

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Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More