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Oil Price Falls On Renewed Lockdowns And A Stronger Dollar
Oil & Gas | 18 January 2021

Oil prices sink as the renewed lockdown hits the world, amidst the on-going pandemic environment in addition to the stronger U.S. dollar.

Brent crude oil fell by 57 cents, or 1%, at $55.42 a barrel at 1205 GMT, after falling at $1 which was $54.99 earlier likewise West Texas Intermediate (WTI) fell by 26 cents, or 0.5%, at $51.98 a barrel.

The prices of commodities were brought down in currency after the U.S. Dollar strengthened. On Friday the New York markets decreased by 2.3% after a rally in oil that took place this week. As the U.S. is still emerging from the pandemic, the country is facing obstacles caused by the economic data.

In the meantime, the current President Joe Biden said that he will ask Congress to grant him $1.9 trillion to fund the immediate relief for the U.S. economy that has been thrashed by the pandemic. The involvement initiatives opposed by many Republicans and the large price tag set up the deal for the prolonged legislative conflict.

The worldwide coronavirus cases have surpassed 90 million; furthermore, the restrictions on mobility in addition to the stronger U.S. Dollar have generated high selling pressure. Half of the world is facing the most difficult time of the pandemic. In this situation, the recovery in demand for oil is hindering the economy as it is delayed for the on-going lockdown.

As the U.S. Dollar strengthens, it makes crude oil more expensive for buyers with other currencies as oil is generally priced in dollars.

Both Brent and Crude sloped upwards for about 8%. To hold production constant, Saudi Arabia has pledged a deal for most of the OPEC producers to a voluntary oil output cut of 1 million barrels per day (BPD) in February and March. This Saudi cut is supposed to aim towards the shortfall of the oil markets despite the high demands of lockdown.

Overall a rebalancing was seen in the oil markets throughout this week.

 

 

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