By Peter Nurse
Investing.com -- Oil prices weakened Monday on expectations of rising supply, while rising Covid-19 cases, particularly in Europe, weighed on the likely recovery of demand.
By 9:15 AM ET (1415 GMT), U.S. crude futures were down 1.2% at $78.73 a barrel, while Brent futures fell 1.1% to $81.27.
U.S. Gasoline RBOB Futures were down 0.5% at $2.2995 a gallon.
Crude has sold off of late, with last week being the third consecutive down week, hit by a strengthening dollar and speculation that President Joe Biden's administration might release oil from the U.S. Strategic Petroleum Reserve to cool prices.
Talk about the potential for the U.S. to add to domestic supply started after the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, rebuffed calls from a number of major consuming countries, including the U.S., to boost production at a faster rate than earlier agreed in order to counter rapidly rising energy prices.
That stance is likely to continue next month, adding to the pressure on the Biden administration to act, after UAE Energy Minister Suhail al-Mazrouei said Monday that all indications point to an oil supply surplus in the first quarter of 2022.
"We care about the producing countries, and we don't want global economic growth to stagnate," Mazrouei said. "However, we cannot simply pump more when there is no technical reason to do so. We are a technical organization and will not make political decisions."
At the same time, the number of U.S. oil and natural gas rigs, an early indicator of future output, rose for a third week in a row by six to 556 last week, its highest level since April 2020, according to energy services firm Baker Hughes.
Elsewhere, the number of Covid-19 cases is growing again in Europe, with Austria and the Netherlands announcing partial lockdowns, suggesting that the recovery of demand during the winter season will be patchy.
And some have doubts over future demand which make it unlikely that oil prices hit $100 per barrel, according to Mohamed El-Erian, chief economic advisor at Allianz (DE:ALVG), at an energy conference in Abu Dhabi.
“If you were to focus only on the supply side, you could get to oil at $100,” El-Erian said, ““But if you look at what is happening on the demand side, there you get some questions. Demand is robust today but will it be robust in six months’ time?”