As the U.S. dollar rose and new coronavirus-related restrictions in Asia, especially China, made the market nervous, oil prices fell more than 3% on Monday.
Brent crude futures tanked by 3.5%, to trade around $68 a barrel at the time of writing this report after a 6% slump last week for their biggest weekly loss in four months.
In the same period, West Texas Intermediate (WTI) crude futures fell by almost 7% to settle at $65.87, following a nearly 7% plunge last week, which was the steepest weekly decline since September 2015.
In light of the accelerating rate of infection with Delta variants, concern about erosion of global oil demand has resurfaced
A number of market analysts point to China’s new restrictions as the major reason affecting demand growth.
A number of airlines have cancelled flights, 46 cities issued travel warnings, and 144 of the worst-hit areas have limited public transport and taxi services.
125 new cases of COVID-19 were reported in China on Monday, up from 96 on Sunday. Infections hit daily records in Malaysia and Thailand.
Several outbreaks of COVID-19 cases and floods in July contributed to a weaker growth in China’s exports. Its import growth was at the same time weaker than expected.
As the U.S. dollar rallied to four-month highs against the euro, oil prices dropped as bets that the Federal Reserve would move more quickly to tighten monetary policy arose after Friday’s weaker-than-expected U.S. jobs report.