Oil in decline, in tune with the stock markets

(New York) Oil prices fell again on Monday, driven by the correction hitting the stock markets, combined with a stronger dollar.

Posted at 11:55 a.m.
Updated at 3:40 p.m.

The barrel of Brent from the North Sea for delivery in March, the most traded in London, lost 1.84% to end at 86.27 dollars.

In New York, a barrel of West Texas Intermediate (WTI), also due in March, fell 2.14% and closed at 83.31 dollars.

“We are clearly in a context of risk aversion, already present in recent days and which weighs heavily today,” explained John Kilduff, of the investment consulting firm Again Capital.

“Oil had chained increases recently but ended up throwing in the towel with the rest of the markets,” continued the analyst.

Black gold also suffered from the appreciation of the dollar, the currency in which most transactions on this market are denominated.

John Kilduff also noted the flurry of PMI activity indices, published in recent hours, witnessing a slowdown in growth, largely linked to the Omicron variant of the coronavirus.

Eurozone, Australia, Japan (for services) or the United Kingdom all softened, with the United States even posting the worst composite index (services and goods) for 18 months, which could affect oil demand.

On Monday, the CEO of Saudi oil giant Aramco, Amin Nasser, however, estimated that demand was now “very close to pre-pandemic levels”.

Oil prices remain close to the peaks reached last week, still supported by uncertainties about supply.

After what could be likened to a first sign of appeasement at the end of the meeting, Friday, between the heads of Russian and American diplomacy, the escalation resumed even more on the Ukrainian file.

Washington ordered the evacuation of the families of its diplomats stationed in Kiev on Sunday, a senior American official believing that “a Russian invasion” could “happen at any moment”.

The Pentagon said on Monday that the United States had placed 8,500 military personnel on alert.

Russia is the world’s third largest oil producer and also provides about a third of Europe’s natural gas needs.

Another source of tension is the Middle East, where Houthi rebels in Yemen fired ballistic missiles at the United Arab Emirates and Saudi Arabia, the world’s second largest producer, on Monday.

The shots were intercepted but they mark a new level in the extension of the conflict which pits the Yemeni power against the Houthi rebels.

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