By Adedapo Adesanya
The start of the new week on Monday was met with weaker oil prices as a stronger US Dollar and a rising confirmed cases of COVID-19 in many countries weighed on market sentiment.
This brought down the price of the Brent crude by 0.58 per cent or 32 cents to $54.78 per barrel and weakened the West Texas Intermediate by 0.52 per cent or 29 cents to $52.09 a barrel.
The main problem currently faced is weakened demand brought about by the coronavirus but soaring cases especially in major economies keep holding back progress.
Prices had rallied in the past few weeks, buoyed by COVID-19 vaccine rollouts and a surprise cut in output by Saudi Arabia but the slow pace of vaccination has raised doubts over how soon economies would recover.
The lockdowns in Europe and the fairly slow start to vaccination programs in many countries also continue to drag down the vaccine angle of the market.
Britain’s vaccine rollout was limited by an unsmooth manufacturing process and Pfizer said it was distributing fewer doses of its vaccine in Europe in January than originally contracted. These are letting the expected recovery time seem impossible.
Also weakening oil prices on Monday was the US Dollar, which strengthening for a third consecutive day on Monday to a four-week high, weighing on crude prices. Oil is usually priced in dollars, so a stronger dollar makes crude more expensive for buyers with other currencies.
Another factor that depressed prices was the growing concerns for investors ahead of this week’s US presidential inauguration of Mr Joe Biden.
Security is reportedly tight in Washington D.C. ahead of Inauguration Day on Wednesday after the Federal Bureau of Investigation (FBI) warned of threats to the city and the possibility of armed groups demonstrating in support of outgoing President Donald Trump.
Mr Biden and Vice President-elect, Kamala Harris will take their oaths of office two weeks after a mob of angry Trump supporters stormed the Capitol in a chaotic protest aimed at thwarting a peaceful transfer of power in which five people died.
The bad market environment outweighed positive good economic data out of China, which beat analyst estimates to post 6.5 per cent annual growth in its economy in the fourth quarter, compared to 6.1 per cent growth expected by analysts.
China is also the only major economy to have posted economic growth last year, of 2.3 per cent. All other major economies in the world are expected to have contracted in 2020, hit by the pandemic.
