Crude Oil Prices Nosedive Amid Asia Travel Curbs and Strong US Dollar

Oil prices plummeted by 2% on Monday in extension to last week’s sharp losses in the wake of a strong dollar and travel curbs in Asia due to rising COVID cases particularly in China. Brent Crude futures slid to USD 1.41 (2%) to USD 69.29 a barrel in series to a drop of 6% last week. US West Texas Intermediate Crude futures fell USD 1.32 (1.9%) to USD 66.96 a barrel in continuation to a loss of over 7% last week.

The reasons for the following prices decrease are being said to be rising travel restrictions in Asia, particularly in China where the curbs include flight cancellations, warnings against travel in major cities, and limits on public transport and taxi services. These restrictions in China (which is also the world’s second largest consumer of oil) are indicators of demand erosion and sharply impacting the demand growth in the Asia region.

Another reason for the fall in oil was the strengthening of US dollar which rallied up to a four-month high against the Euro under the expectation that the US federal reserve might move more quickly to a tighter monetary policy. Stronger US dollar is expected to make oil more expensive for holders of other currencies.