Oil prices fell on Monday as COVID-19 vaccines and OPEC+ deal on oil production cuts were undermined by surging virus cases. They were also further weakened by heightened tensions between the United States and China.
By 0911 GMT, Brent crude was down 76 cents, or 1.5%, to $48.49 a barrel. U.S. crude fell 82 cents, or 1.8%, at $45.44.
Reports said that the United States was preparing to impose sanctions on at least a dozen Chinese officials. That is over their alleged role in Beijing’s disqualification of elected opposition legislators in Hong Kong.
Both oil contracts gained last week. That came after OPEC+ agreed to increase output slightly from January but continue the bulk of existing supply curbs.
A surge in COVID-19 cases globally has forced a series of renewed lockdowns. New measures were put in place in the U.S. state of California, Germany, and South Korea.
Iran has instructed its oil ministry to prepare installations for the production and sale of crude oil at full capacity. That’s within three months, state media said on Sunday.
Gold Up on U.S. Stimulus Measures
Gold was up on Monday morning in Asia’s precious metals. Hopes for new U.S. fiscal stimulus measures counter downward pressure from optimism around COVID-19 vaccines roll-outs.
By 11:37 PM ET (3:37 AM GMT), gold futures were up 0.08% at $1,841.55. SPDR Gold Trust reported that its holdings dropped 0.6% to 1,182.70 tons on Friday.
A bipartisan group of lawmakers is working on a fresh $908 billion bill. Moreover, talks about passing a COVID-19 relief package are growing in Congress.
A disappointing U.S. jobs data released on Friday highlights the need for a package. The data also showed the extent of the COVID-19-induced economic slowdown.
The U.S. economy added the fewest workers since May. Non-farm payrolls grew by 245,000 in November. In the same month, manufacturing payrolls increased by 27,000.
Meanwhile, in other commodities news, the U.S. Bureau of Safety and Environment Enforcement said it’ll consider lower royalty payments. That’s for producers that invest in projects to enable existing platforms to reach their full capacity. The BSEE is what oversees offshore oil and gas production.
This royalty relief offer comes in the final months of the Trump administration. It follows similar policy changes in shallow-water drilling last year.
BSEE found that four in every five deepwater facilities produce at less than half of its nameplate capacity. This was a statement from agency director Scott Angelle on Thursday.
The Gulf of Mexico has 68 deepwater offshore facilities and 38 produce at less than 25% of their full capacity, he said.