Oil's supply-led rally peters out as virus cases surge | Reuters

Oil's supply-led rally peters out as virus cases surge | Reuters

Oil prices on Monday fell further from 11-month highs touched last week, ending a rally that started at end-October on production cuts and strong Chinese demand, with the market’s outlook questioned as coronavirus infections rise.

Brent crude fell 20 cents, or 0.4%, to $54.90 a barrel by 0737 GMT, after dropping 2.3% on Friday. U.S. oil was down by 13 cents, or 0.3%, at $52.23 a barrel, having declined 2.3% in the previous trading session.

The benchmarks had rallied in recent weeks, buoyed by the start of COVID-19 vaccine rollouts and a surprise cut of crude output by the world’s biggest oil exporter, Saudi Arabia. Surging new infections throughout the world, however, have raised doubts about how long demand would hold up.

“The Relative Strength Indexes (RSI’s) on both contracts were in overbought territory, indicating a correction was on its way,” said Jeffrey Halley, senior market analyst at OANDA.