50% Off! Beat the market in 2025 with InvestingProCLAIM SALE

Oil prices post weekly loss on Omicron uncertainty

Published 12/16/2021, 09:24 PM
Updated 12/17/2021, 04:51 PM
© Reuters. FILE PHOTO: The Bryan Mound Strategic Petroleum Reserve, an oil storage facility, is seen in this aerial photograph over Freeport, Texas, U.S., April 27, 2020.  REUTERS/Adrees Latif/File Photo
GS
-
LCO
-
VNDA
-

By Jessica Resnick-Ault

NEW YORK (Reuters) -Oil prices fell on Friday and were also down on the week as surging cases of the Omicron coronavirus variant raised fears that new restrictions may hit fuel demand.

"There are concerns about COVID that won't go away, and the perception that could weigh on demand is putting pressure on the market," said Bob Yawger, director of energy futures at Mizuho in New York.

Brent crude futures settled down $1.50, or 2%, at $73.52 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped $1.52, or 2.1%, to settle at $70.86 a barrel. Brent was down 2.6% on the week and WTI fell 1.3%.

In Denmark, South Africa and Britain, the number of new Omicron cases has been doubling every two days. Danish Prime Minister Mette Frederiksen said on Friday her government would propose new restrictions https://www.reuters.com/world/europe/denmark-proposes-new-restrictions-curb-surge-coronavirus-cases-2021-12-17 to limit the spread.

In the United States, the rapid spread of the Omicron variant has led some companies to pause plans https://www.reuters.com/world/us/omicron-delivers-another-uncertain-holiday-season-pandemic-weary-americans-2021-12-16 to get workers back into offices.

"Messages of caution and warnings of a worsening COVID wave are starting to ring louder with the approach of the year-end holiday season, dampening market sentiment," said Vandana Hari, energy analyst at Vanda (NASDAQ:VNDA) Insights. "Crude may remain in a holding pattern, albeit with plenty of price volatility around the mean, in holiday-thinned trading over the next couple of weeks."

The Organization of the Petroleum Exporting Countries, Russia and allies, together known as OPEC+, have said they could meet before their scheduled Jan. 4 meeting if changes in the demand outlook warrant a review of their plans to add 400,000 barrels per day of supply in January.

"We could see further consolidation around $70 in the coming sessions as we learn more about Omicron, what restrictions it will bring, and whether OPEC+ will react," said Craig Erlam, senior market analyst at OANDA.

The U.S. oil rig count, a leading indicator of output, rose in the week, prompting concerns of potential oversupply. The oil and gas rig count, an early indicator of future output, rose by three to 579 in the week to Dec. 17, energy services firm Baker Hughes Co said in its closely followed report on Friday. [RIG/U]

© Reuters. FILE PHOTO: The Bryan Mound Strategic Petroleum Reserve, an oil storage facility, is seen in this aerial photograph over Freeport, Texas, U.S., April 27, 2020.  REUTERS/Adrees Latif/File Photo

But despite the Omicron threats to demand, Goldman Sachs (NYSE:GS) said on Friday the new variant has had limited impact on mobility or oil demand, adding that it expected oil consumption to hit record highs in 2022 and 2023.

Oil prices have retreated from multi-year highs earlier in the fourth quarter on improved supplies.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.