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© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing Oil Center
By Yuka Obayashi
TOKYO (Reuters) – Oil prices fell in the early hours of trading on Monday as a new strain of coronavirus spreading rapidly in the UK raised concerns that tighter restrictions there and in other European countries could halt the spread. recovery of the world economy and its need for fuel.
It fell 97 cents, or 1.9%, to $ 51.29 a barrel at 0103 GMT after rising 1.5% and hitting its highest level since March last Friday.
US West Texas Intermediate (WTI) crude fell 83 cents, or 1.7%, to $ 48.27 a barrel after also rising 1.5% Friday to its highest level since February.
Monday’s drops came after oil prices marked seven consecutive weeks of gains last week as investors focused on the launch of COVID-19 vaccines.
“A new variant of the coronavirus in Britain and tighter travel restrictions in Europe sparked fears of a slower economic recovery, prompting investors to undo long positions,” said Kazuhiko Saito, chief analyst at the commodity brokerage. raw Fujitomi Co.
“The oil market has been on an uptrend in the last month, ignoring the negative factors, amid optimism that an increasing rollout of vaccines would reignite global growth, but optimistic investor expectations for 2021 have suddenly fainted, “Saito said.
British Prime Minister Boris Johnson will chair an emergency response meeting on Monday to discuss international travel, in particular the flow of cargo in and out of Britain as COVID-19 cases rose to record numbers during one day. The headache comes as Johnson also seeks to reach a final deal on Brexit.
The variant, which officials say is up to 70% more transmittable than the original, also raised concerns about wider spread, forcing several European countries to begin closing their doors to UK travelers.
The negative sentiment also overshadowed a weekend deal among US congressional leaders for a $ 900 billion coronavirus aid package.
Adding to the pressure, the oil and gas rig count, an early indicator of future production, rose by eight to 346 in the week through Dec. 18, the highest since May, Baker Hughes said on Friday, as Producers continue to return to the well with crude prices trading above $ 45 a barrel since late November.
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