Oil futures pulled back Monday, feeling pressure as the U.S. dollar continued its bounce off a more than 2 1/2-year low and as renewed COVID-19 lockdowns underscored demand worries.
West Texas Intermediate crude for February delivery
the global benchmark, dropped 64 cents, or 1.1%, to $55.35 a barrel on ICE Futures Europe.
“The renewed concerns about demand due to very high numbers of new corona cases and further mobility restrictions, plus the stronger U.S. dollar, are generating selling pressure,” said Eugen Weinberg, commodity analyst at Commerzbank, in a note.
Oil surged last week, with both Brent and WTI trading at levels last seen in early February, boosted in part by Saudi Arabia’s surprise decision to cut production by 1 million barrels a day in February and March.
The dollar was higher versus major rivals. lifting the ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, by 0.4%. The index has fallen sharply since last March and hit a more than 2 1/2-year low last week before beginning to push higher as yields on Treasury notes rose last week.
Commodities and the dollar often show an inverse relationship. A weaker dollar makes commodities priced in the greenback less expensive to users of other currencies, while a stronger dollar makes them more expensive.
Meanwhile, the U.S. saw at least 208,338 new cases of COVID-19 reported on Sunday, according to a New York Times tracker, and counted at least 1,777 deaths, numbers that may be underreported due to lower weekend staffing.
On Friday, the U.S. set a single-day record of more than 300,000 new cases. In the past week, the U.S. has averaged 254,866 cases a day, numbers that experts had warned would materialize if Americans traveled in large numbers during the recent holiday season.
February natural-gas futures
fell 2% to $1.5113 per million British thermal units.