Oil supply-led rally ends as coronavirus cases surge

Oil prices slid further on Monday from recent 11-month highs, ending a rally that began in October on strong Chinese demand and output cuts, with the market outlook doubted as COVID-19 cases rose.

Brent crude dropped 0.5%, or 30 cents, at $54.79 per barrel following a 2.3% decline on Friday. U.S. oil fell 0.4%, or 21 cents, at $52.15 per barrel after falling 2.3% in the last session.

Both contracts rallied in recent weeks, supported by the vaccine rollouts and Saudi’s pledge to cut production. Rising global COVID-19 infections have also raised questions about demand improvement.

U.S. drillers added more oil and natural gas rigs for an eighth straight week as rising prices made output more profitable. Still, the number of operation rigs remain less than half of the level last year.