MOSCOW (MRC) -- Oil prices slumped on Monday as surging cases of the Omicron coronavirus variant in Europe and the United States stoked investor worries that new restrictions to combat its spread could dent fuel demand, reported Reuters.
Brent crude futures fell USD2, or 2.7%, to settle at USD71.52 a barrel, while US West Texas Intermediate (WTI) crude futures fell USD2.63, or 3.7%, to settle at USD68.23 a barrel.
Brent fell to a session low of USD69.28 per barrel, while WTI sank to USD66.04 per barrel, both their lowest levels since early December.
"This is a knee-jerk reaction to the proliferation of the virus and the fear that lockdowns can rapidly spread," said Andrew Lipow of Lipow Oil Associates in Houston.
The Netherlands went into lockdown on Sunday and the possibility of more COVID-19 restrictions being imposed ahead of the Christmas and New Year holidays loomed over several European countries.
US health officials urged Americans on Sunday to get COVID-19 booster shots, wear masks and be careful if they travel over the winter holidays, with the Omicron variant raging across the world and set to take over as the dominant strain in the United States.
Oil prices fell despite Moderna Inc's announcement on Monday that a booster dose of its COVID-19 vaccine appeared to be protective against Omicron in laboratory testing.
Meanwhile, OPEC+ compliance with oil production cuts stood at 117% in November, up 1 percentage point from the previous month, two sources from the group told Reuters, as output continues to lag agreed targets.
In the United States, energy companies added oil and natural gas rigs for a second week in a row.
The oil and gas rig count, an early indicator of future output, rose by three to 579 in the week to Dec. 17, representing its highest number since April 2020, energy services business Baker Hughes Co said in its closely followed report on Friday.
As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.
We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.
We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, EIA said in a monthly report earlier this year, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC