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Crude Oil Slumps on Renewed Covid Travel Fears

CommoditiesNov 26, 2021 09:20AM ET
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© Reuters.

By Peter Nurse   

Investing.com -- Oil prices collapsed Friday, falling to the lowest levels in two months after the news of a new Covid variant led to fears of renewed mobility restrictions, potentially hitting demand from the air travel market.

By 9:20 AM ET (1420 GMT), U.S. crude futures traded 6.9% lower at $73.02 a barrel, while the Brent contract fell 6.1% to $77.23. Both benchmarks have fallen to their lowest levels since the end of September 

U.S. Gasoline RBOB Futures were down 6.3% at $2.1740 a gallon.

These losses followed the World Health Organization announcing the detection, mainly in and adjacent to South Africa, of a new and possibly vaccine-resistant coronavirus variant.

The United Kingdom said this variant was the most significant one found yet, and banned flights from South Africa, Botswana, Lesotho, Eswatini, Zimbabwe and Namibia. 

European Commission chief Ursula von der Leyen said the EU also aimed to halt flights from the region, describing the variant as "of concern."

The rebound in air travel is a key component in 2022 demand growth forecasts, representing the only major part of oil demand which is still clearly lagging 2019 levels.

“If the new variant does deliver its potential (usurping Delta, and reducing vaccine efficacy) we need to think about a globally soft/flat Q4 and Q1 GDP growth,” said Peter Chatwell, head of multi-asset strategy at Mizuho International, Reuters reported. “Vaccine efficacy will determine the severity of lockdowns, and therefore whether this becomes another recession.”

This news will increase the uncertainty of what the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, will decide to do when it meets to discuss production levels next week.

The group was already having to discuss the likely impact of the move by the coalition of major consumers, led by the U.S., to release crude from emergency supplies.

“OPEC’s Economic Commission Board warned that the global oil market could see large surpluses due to these releases, particularly over the early part of next year,” said analysts at ING, in a note. “As usual, expect plenty of noise in the lead up to next week’s OPEC+ meeting.”

Crude Oil Slumps on Renewed Covid Travel Fears
 

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Comments (6)
Lars Hellman
LarsH Nov 26, 2021 1:00PM ET
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Long since we had a revolution. French, American, Russian, Chinese Revolutions. All too old and long ago The people in power needs a global revolution. Stoking people panik fears.
John Brown
John Brown Nov 26, 2021 11:55AM ET
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Trump 2024!
ANAND TIWARI
ANAND TIWARI Nov 26, 2021 11:55AM ET
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ok lol it will go down anyway . 78 dollars were literally too high and people who were holding there positions collapsed lol .
Lars Hellman
LarsH Nov 26, 2021 11:55AM ET
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ANAND TIWARI it will soon be $100+
Jamie An
Jamie An Nov 26, 2021 10:13AM ET
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Who will get benifit from these fears, that nothing is clear only fear comes.from uncertainties. Yes, Biden do.
Whaling Trawler
Whaling Trawler Nov 26, 2021 10:03AM ET
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fake
Robin Martin
Robin Martin Nov 26, 2021 9:40AM ET
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This is getting laughable how they are trying to bring the word down...what a joke!
Robin Martin
Robin Martin Nov 26, 2021 9:40AM ET
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World***
Adrian White
Adrian White Nov 26, 2021 9:40AM ET
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Who is "they"? What's laughable is that you think somebody is "trying to bring the world down".
Abdi Abdifataah
Abdi Abdifataah Nov 26, 2021 9:38AM ET
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is good
 
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