Oil prices fell sharply on Monday as new lockdowns across Europe and record coronavirus cases in the United States slammed the outlook for energy demand.
Brent crude, the global benchmark, fell as much as 5% in early morning trading in Asia, touching levels last seen in May, before paring losses to trade 2% lower at $37. 13 a barrel.
Decisions by European governments to impose another round of severe coronavirus restrictions is weighing on sentiment.
These four countries consume the equivalent of a little over 6% of global consumption, “so no surprise that we are seeing the market reacting this morning,” ING’s head of commodities strategy Warren Patterson and senior commodities strategist Wenyu Yao wrote in a research note on Monday.
There are also worries that governments elsewhere will be forced to reimpose restrictions heading into the holiday season.
The United States recorded 81,493 new coronavirus cases on Sunday, after reporting 99,321 on Friday, the highest single day number of cases for any country, according to Johns Hopkins University.
“Fresh worries that politicians worldwide will be pressured to lock down Christmas this year is hitting the oil markets like a ton of bricks,” Stephen Innes, chief global markets strategist at Axi said in a research note.
“The alarmingly high level of angst in the markets makes it easy for the oil roller coaster to crest rally peaks and head downhill at alarmingly quick speeds,” he added.
