By Peter Nurse
Investing.com -- Oil prices fell Thursday, handing back some of the week’s strong gains with a degree of caution returning as governments undertake measures to slow the spread of the Omicron Covid variant.
By 9:25 AM ET (1425 GMT), U.S. crude futures traded 0.7% lower at $71.83 a barrel, while the Brent contract fell 0.7% to $75.27.
U.S. Gasoline RBOB Futures were down 0.1% at $2.1463 a gallon.
The U.K. government announced new restrictions in England on Wednesday, urging citizens to work from home and wear masks in public following a sharp growth in the number of Covid cases.
The U.K. Health Security Agency warned that the country could register 1 million cases by the end of this month given the steep trajectory of the spread of the Omicron variant.
Additionally, many countries in Europe have already placed mobility constraints on their populations, while in Asia, South Korea has registered record infections while cases remain elevated in Singapore and Australia.
Omicron now accounts for 46% of reported cases globally, according to Richard Mihigo, coordinator of the World Health Organization's Immunization and Vaccine Development Programme for Africa.
Adding to the bearish sentiment in the crude market was the news that the number of Americans filing new claims for unemployment benefits dropped to the lowest level in more than 52 years last week, falling 43,000 to a seasonally adjusted 184,000.
With inflation running at record levels, this strong employment number has given the U.S. dollar a boost ahead of next week’s Federal Reserve meeting, when the central bank is likely to speed up its tapering plans.
A strong dollar weighs on commodities as it makes them more expensive for foreign consumers given they are denominated in the greenback.
U.S. inventory data released on Wednesday also weighed on prices.
Energy Information Administration data showed that crude inventories were down by 240,000 barrels last week, much less than expected after data from the American Petroleum Institute, released the day before, showed a draw of well over 3 million barrels.
That said, both crude benchmarks remain almost 8% higher this week, rebounding after a 16% slump in Brent prices from Nov. 25 to Dec. 1, as reports have indicated that Omicron cases have only shown mild symptoms and drug makers have expressed confidence in their vaccines if boosters are included.