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, Reuters reports. 

Brent crude fell 30 cents, or 0.5%, to $54.79 a barrel by 0622 GMT, after dropping 2.3% on Friday. U.S. oil was down by 21 cents, or 0.4%, at $52.15 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.

U.S. drillers added further pressure by putting more oil and natural gas rigs to work for an eighth consecutive week last week because rising prices have made production more profitable. Still, the number of operating rigs is less than half of the level of a year ago.

U.S. shale producers have quickly responded to market gains in recent years, winning market share as Saudi Arabia and other major producers such as Russia have cut production in an attempt to support global oil and gas prices.

News.Az