Oil prices slip amid strengthening dollar

Crude oil prices edged down as strengthening dollar and new travel restrictions to contain the spread of the Covid-19 virus raised concerns over global fuel demand.

Brent crude futures slipped by $0.36, or 0.65%, to reach $55.45 a barrel, while US West Texas Intermediate (WTI) crude futures reduced by $0.33, or 0.62%, to get $52.52 a barrel, reported Reuters.

According to analysts, while the US dollar has strengthened with its index standing at 90.753, US crude stockpiles reduced in the week ending 22 January due to increased US crude exports and reduced imports.

However, concerns are increasing over fuel demand amid a rise in Covid-19 cases, a delay in Covid-19 vaccine supply in Europe, and travel restrictions in countries, including China.

The news agency reported Axi chief global market strategist Stephen Innes as saying: “We are moving from just a Q1 demand write off to now pricing in more demand pain in Q2 due to the slow vaccine rollout.

“Particularly from Europe where the slow vaccine rollout and the extended lockdowns point to a double-dip recession.”
The world’s second-largest oil consumer, China, is seeking to implement travel restrictions due to increasing coronavirus cases ahead of its busiest travel season of the year, the Lunar New Year holiday.

Moreover, Australia has extended its quarantine-free travel restriction with New Zealand following reports of two new positive cases of the South African Covid-19 variant in New Zealand.