Oil prices slips over sluggish demand fears

Shafaq News/ Oil prices dropped on Tuesday as tighter lockdowns in Europe and a forecast for a slower recovery in demand next year.

U.S. West Texas Intermediate (WTI) crude futures fell 26 cents, or 0.55%, to $46.75 a barrel at 05:45 GMT, while Brent crude futures fell 31 cents, or 0.62%, to $50.2 a barrel, erasing Monday’s gains.

London stepped up restrictions requiring bars and restaurants to close as COVID-19 infection rates continued to rise sharply, which will dent fuel demand in the near term.

Italy said it was considering more stringent restrictions over the Christmas holidays, while most stores in Germany have been ordered to shut until Jan. 10, with little prospect of an easing early in the new year.

OPEC on Monday pared its forecast for a recovery in oil demand in 202l by 350,000 barrels per day, due to the persistent impact of the pandemic, but said a rapid rollout of vaccines in major economies “provides potential upside for next year’s growth forecast.”

Oil prices had found some support after a fuel transport ship at the Saudi Arabian port of Jeddah was hit by an explosion on Monday, but the kingdom’s ministry of energy noted the incident did not cause any effect on supplies.