A direct consequence of the discovery of the mutant coronavirus :
As a direct consequence of the measures taken against the United Kingdom and pronounced in the last few hours by various countries including France, oil prices fell at the beginning of the session on Monday. This drop comes at a time when travel restrictions have been imposed following a new pandemic in the country involving an unknown variant of Covid-19. The first impact of this news will indeed be difficulties in economic recovery.
During the morning, a barrel of Brent crude oil from the North Sea for delivery in February lost 5.44% of its value in London and was priced at 49.52 dollars. American crude oil fell by 5.13% to USD 46.58.
Indeed, the market now seems worried about this variant of the coronavirus which was detected in the United Kingdom and which overshadows the agreement of the American Congress on the plan to support the economy. Indeed, the country is currently the target of a more contagious strain of coronavirus and is once again cut off from the world following the decision of several countries to suspend their links with it.
An overestimation of the recovery in the oil market :
As we have just seen, it was mainly the travel bans caused by this new wave of the pandemic that caused crude oil prices to fall this year as consumers no longer used their usual means of transport.
However, this new mutation of the virus has completely dashed hopes of a real recovery in demand suggested by the start of the vaccination campaigns, which had allowed crude oil to regain 40% of its value since November.
But other elements involved have also been identified. In particular, the value of the Dollar, which is considered a safe haven, rose on Monday, making Oil more expensive for investors in other currencies. Faced with these data, the plan to support the U.S. economy agreed to by Congress, which would involve $900 billion in aid to the world's largest oil consumer, was overshadowed.
According to some industry analysts, the oil market may have over-projected into the future by ignoring current data and the difficulties of the economy while vaccination campaigns are still in their infancy.