By Peter Nurse
Investing.com -- Oil prices retreated Monday after the U.K. recorded its first death from the Omicron variant of the Covid-19 virus, prompting traders to reassess the potential for longer than previously expected mobility restrictions.
By 9 AM ET (1400 GMT), U.S. crude futures traded 0.5% lower at $71.31 a barrel, while the Brent contract fell 0.4% to $74.89.
U.S. Gasoline RBOB Futures were up 0.2% at $2.1404 a gallon.
Both crude benchmarks posted gains of about 8% last week, their first weekly gain in seven, on hopes the Omicron variant, while highly transmissible, would prove less dangerous for those infected than previous versions.
However, the World Health Organization said Monday that the Omicron coronavirus variant poses a "very high" global risk, adding that there was some evidence that it evades vaccine protection, but clinical data on its severity is limited.
Additionally, U.K. Prime Minister Boris Johnson announced on Monday that at least one person has died in the United Kingdom after contracting the Omicron variant of the coronavirus.
Last week Johnson asked the public to work from home if possible and to wear masks on public transport, and then on Sunday he urged the country to get booster shots to prevent the health service from being overwhelmed, warning that a “tidal wave” of cases was approaching.
On a more positive note, the Organization of the Petroleum Exporting Countries raised its world oil demand forecast for the first quarter of 2022 but left its full-year growth prediction steady, saying the Omicron coronavirus variant would have a mild impact as the world gets used to dealing with the pandemic.
"Some of the recovery previously expected in the fourth quarter of 2021 has been shifted to the first quarter of 2022, followed by a more steady recovery throughout the second half of 2022," OPEC said in the report.
"Moreover, the impact of the new Omicron variant is projected to be mild and short-lived, as the world becomes better equipped to manage Covid-19 and its related challenges."
Also in focus this week will be the Federal Reserve’s two-day policy-setting meeting, concluding on Wednesday. with the U.S. central bank widely expected to acknowledge surging inflation by speeding up the tapering of its bond-buying program.
This could result in a firmer dollar, weighing on crude prices as it makes oil more expensive for buyers holding other currencies.