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– The nightmare before Christmas scenario has begun, with a combination of the “mutant virus” and Brexit anxiety.
Here’s what chief marketing strategist Stephen Innes says at Axi, according to the Reuters news agency.
Red Stock Exchanges
The backdrop is a Monday in which stock prices plummeted in large parts of the world at the same time as oil prices plummeted.
This came as country after country closed its borders to travelers from the UK, after a more contagious mutation of the coronavirus was detected.
Europe closes for Christmas
– Most countries stopped all traffic to and from the UK yesterday, after a new variant of the virus was detected. The price of oil, which is sensitive to global growth, fell sharply as a result, writes Nordnet analyst Roger Berntsen in his morning commentary on Tuesday.
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Less than 50 dollars
In the first weeks and months after this spring’s pandemic outbreak, oil prices fell just below $ 20 a barrel, in a combination of fears over the virus and stalled negotiations between OPEC and Russia over production cuts. .
Since the end of October, a steady rise from $ 37 a barrel to more than $ 50 began, before last night the price of a barrel of North Sea oil (burned point) fell again below $ 50, for the first once in several weeks.
In next year’s state budget, the government has set an oil price between $ 59 and $ 52 a barrel. Prices below this level are therefore bad news for Norwegian finance.
– It is not known how long the UK will remain isolated, but work is in full swing to find new routines so that freight transport can go its own way, Berntsen emphasizes in the Nordnet report.
It takes hold in Norway
On Monday, Norway became another country, in increasing numbers, to introduce an entry ban from the UK. It also has consequences for oil workers.
This is how the flight ban is affected
– The situation in the UK is dire and our industry must assume its share of responsibility to prevent this new variant of the virus. So we are also updating our recommendations for offshore travel for UK travelers, says William Johnsen, strategic advisor at Norwegian Oil and Gas at Børsen.
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However, he is quick to add that the measures will have no immediate effect on production on the Norwegian platform.
Brexit queue at the border
– The flight ban is not of immediate relevance to production on the Norwegian platform and safety and environmental considerations are not affected. On the other hand, it will cause major problems for well servicing and mobile facilities if the flight ban is maintained for a longer period of time. Companies are now working to take care of employees who are affected by the flight ban, Johnsen says.
Turned abruptly
DnB Markets analyst Ole Andreas Krohn also links the price drop to fears of the new variant of the coronavirus.
– The euro pandemic has also hit the oil market in the last 24 hours, Krohn writes.
– The biggest impact of all time
The sudden recession comes after a long period of optimism about vaccines in the markets.
– The downside risk is now greater than the upside until we better understand what action politicians will take in 2021 and whether they will shut down the partnership again, continues Axi strategist Stephen Innes.
He believes that the oil market has been overbought and says a “sell-off” was inevitable.
