By Gina Lee
Investing.com – Oil was down Tuesday morning in Asia, with fuel demand concerns rising after more countries tightened measures to curb the spread of the omicron COVID-19 variant.
Brent oil futures fell 0.52% to $74 by 10:49 PM ET (3:49 AM GMT) and WTI futures fell 0.56% to $70.89.
The Organization of the Petroleum Exporting Countries on Monday raised its world oil demand forecast for the first quarter of 2022 and will stick to its timeline for a return to pre-COVID-19 levels of oil use. The cartel also expects that omicron will have a mild and temporary impact.
"Energy traders don't want to bet against Organization of the Petroleum Exporting Countries and allies (OPEC+) but all the short-term risks from omicron to U.S. Federal Reserve monetary policy tightening is proving to be very disruptive to the short-term outlook for oil prices," OANDA senior analyst Edward Moya told Reuters.
"The virus spread across Europe is delivering a bigger hit than expected and when you calculate family gatherings for the holidays, the short-term outlook could get slashed over the next month."
The U.K. reported its first omicron-related death, said Prime Minister Boris Johnson. Other countries, including Norway, are tightening restrictive measures to curb the variant’s spread. In Asia Pacific, China also reported its first omicron case, and the province of Zhejiang is fighting its first COVID-19 cluster in 2021.
Meanwhile, Asian Development Bank on Tuesday cut its growth forecasts for developing Asia for 2021 and 2022. The uncertainty and risks brought on by omicron could also impact fuel demand.
On the supply side, the largest U.S. shale basin's output is expected to surge to a record in January 2022, according to Monday’s monthly forecast from the U.S. Energy Information Administration. Investors now await U.S. crude supply data from the American Petroleum Institute, due later in the day.