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oil and gasDecember 23, 2020

Oil prices decline as new coronavirus strain affects demand

Oil prices fell on Tuesday as a new strain of coronavirus detected in the United Kingdom increase worries over fuel demand recovery.

The new strain is believed to be 70% transmissible, its widespread has shut down Britain and made a lot of countries close their borders to British travellers.

Brent crude futures were down 54 cents, or 1.1% to $50.37 a barrel at 05:31 GMT while US West Texas Intermediate (WTI) crude futures fell 59 cents, or 1.2%, to $47.38 a barrel.

Both benchmarks declined by 3% on Monday, affecting gains made due to COVID-19 vaccine roll out.

Stephen Innes, chief market strategist at Axi said, 'the nightmare before Christmas scenario has set in, with a combination of the 'mutant virus' compounded by Brexit angst.'

US dollar is rising serving as a safe-haven currency, however, a US-dollar priced oil is not appealing for buyers using other currencies. That has also affected oil prices.

Investors are waiting for US crude inventory reports to determine the near-term market.