FX.co ★ Oil prices sank as market struggle amid emergence of new coronavirus variant

Crude oil prices decline on Monday morning amid news about the emergence of a new mutation of coronavirus infection, which was first recorded in the UK. This new variant of coronavirus is currently spreading across the UK at a rapid pace and already began to be recorded in several countries.

The price of futures contracts for Brent crude oil for delivery in February on the trading floor in London sank 0.29% or $0.15, compared to the previous value. Its current level is still consolidating at $51.14 per barrel and is still quite high. Recall that during the last trading session, before the holidays, contracts were able to increase 0.2% or $0.09, which sent the final cost at $51.29 per barrel.

The price of futures contracts for WTI crude oil for delivery in February on the electronic trading platform in New York slightly fell 0.06% or $0.03, which sent it to $48.2 per barrel. Thursday's trading session was more successful for the brand which gained 0.2% or $0.11, which sent the final price at $48.23 per barrel.

Prices of both brands in the short pre-holiday week, which ended December 24, was lower than their previous value, and the drop was quite significant. In particular, Brent sank by 1.9%, and WTI-by 2.1%. It should be noted that the negative weekly trend in crude oil prices has not been recorded for quite a long time. The last time this happened was at the end of October of this year, and since then, black gold has increased its value, albeit slightly.

This negative in the oil market was mainly caused by the news about the extremely complicated epidemiological situation in the world. Recall that last week it became known that a new strain of COVID-19 was detected in the UK, which is characterized by a higher rate of spread. And just a few days ago, reports said that the new type of coronavirus infection has already appeared in France, Norway, Japan, and Canada. Despite the fact that many countries almost immediately suspended transport links with the UK, it seems that it will not be possible to avoid the mass spread of a more dangerous strain. And this makes market participants more anxious because the recovery of demand for raw materials directly depends on the lifting of restrictions and quarantine around the world, which in these conditions becomes almost impossible. Moreover, it is worth waiting for an even greater strengthening of restrictive measures in an attempt to stop a new wave of infections.

China was among the first to switch to a more stringent quarantine. The authorities in Beijing have already tightened quarantine measures for the period of festive events in the hope of avoiding a repeat of the situation a year ago. China was followed by South Korea where social distancing measures have been introduced, but a fairly significant daily increase in cases remains.

There is, however, more positive news for the crude oil market, which can support it in unfavorable conditions. As it became known, the still current US President, Donald Trump, has approved his decisions on the state budget for the next fiscal year 2021 in the amount of $2.3 trillion. This includes measures to support the economy from the consequences of the coronavirus pandemic amounting to $900 billion. Earlier, Trump flatly refused to ratify the aid package that was passed by Congress, insisting on its immediate expansion. And now he also does not give up his position, so the House of Representatives will have to meet on Monday to discuss increasing the amount of direct payments to citizens from the previously designated level of $600 to $2,000.