FX.co ★ Oil amid pandemic scares: black gold prices decline after two-day growth

According to trading data, global oil prices are declining on Thursday – the growth of coronavirus diseases scares traders with a collapse in demand for raw materials. Recall that since the beginning of the week, oil has risen by an average of 3-4% on the background of news about the coronavirus vaccine and in anticipation of new OPEC+ measures.

The price of January futures for the North Sea oil mix Brent fell by 0.9% to $43.95 per barrel. January futures for WTI crude oil decreased by 1.36% to $41.42 per barrel, December futures fell by 1.58% to $41.16 per barrel.

Is it worth explaining that the main reason for such negative pressure on the markets remains the COVID-19 pandemic? Despite claims of effective vaccine trials, infection statistics continue to increase investors' concerns about demand.

And there are many serious reasons for these experiences. A number of countries announced a record increase in COVID-19 infection. On Thursday, the Tokyo administration raised the threat level for the spread of coronavirus to the highest (fourth) due to the accelerating increase in the number of infections. In the United States, more than 160,000 infected people have been identified over the past day, and more than 11 million people have fallen ill in the country since the beginning of the pandemic. Many states are already introducing new quarantine restrictions, and New York is closing public schools – students are being transferred to full distance learning. It is obvious that the new restrictions will lead to a decrease in mobility and employment, and this, in turn, will negatively affect the state of the global economy.

Experts believe that the uncontrolled spread of the second wave of COVID-19 and new restrictive measures around the world have restrained the mood of market participants in connection with the threat of lower demand for fuel. In addition, investors are taking profits after the recent rally and reducing turnover before the thanksgiving weekend in the US.

The hopes of oil market participants, traditionally pinned on the decisions of the OPEC + Ministerial Monitoring Committee, also failed to materialize. Members of the organization decided to postpone the adoption of a recommendation on a possible increase in oil production by 2 million barrels per day in a matter of two weeks. At the same time, contradictions within the cartel are growing, in particular, the United Arab Emirates is dissatisfied with the distribution of quotas and is discussing the possibility of leaving OPEC+.