Oil prices on the world market fall after two weeks of growth

SARAJEVO, (Patria) - On world markets, oil prices fell last week, after two weeks of growth, as traders fear that due to the further spread of coronavirus in the world, demand for oil will not recover as quickly as they had hoped.

The price of a barrel on the London market fell by 1.6 percent last week, to USD 55.1, while on the American market, a barrel fell by 0.4 percent, to USD 52.36, reports SEEbiz.

At the beginning of last week, oil prices reached new highs in almost a year, as investors hoped for stronger demand, while, on the other hand, Saudi Arabia announced a further reduction in production by one million barrels per day in February and March to stop the accumulation of stocks.

Saudi cuts are an integral part of the agreement between the world's leading oil producers, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, according to which most of them should maintain production at current levels in February.

The announcement of new stimulus measures for the US economy also supported prices.

President-elect Joe Biden, who takes office on January 20, presented a proposal for a new package of fiscal stimulus measures.

The value of the package is about USD 1.9 trillion, which includes USD 415 billion to combat COVID-19, about USD 440 billion in aid to small businesses, and USD 1 trillion in direct aid to households.

However, in the second half of the week, oil prices fell due to the further spread of coronavirus in the world, which led to new restrictive measures or the extension of existing ones in many countries, including Japan, Germany, and France.

More than 28 million people are in lockdown in China, and on Friday, it was announced that the highest number of new infections in the last ten months was recorded in the last 24 hours.

Therefore, traders fear a slow recovery in fuel demand.

Further movement of oil prices will depend most on how quickly the world economy, and thus the demand for oil, recovers from the corona crisis.

Due to this crisis, oil prices fell by more than 20 percent last year.