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Oil prices plunge as Omicron's rapid spread dims fuel demand outlook

CommoditiesDec 20, 2021 03:00PM ET
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© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus MordanT/File Photo

By Stephanie Kelly

NEW YORK (Reuters) - Oil prices slumped on Monday as surging cases of the Omicron coronavirus variant in Europe and the United States stoked investor worries that new restrictions to combat its spread could dent fuel demand.

Brent crude futures fell $2, or 2.7%, to settle at $71.52 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell $2.63, or 3.7%, to settle at $68.23 a barrel.

Brent fell to a session low of $69.28 per barrel, while WTI sank to $66.04 per barrel, both their lowest levels since early December.

"This is a knee-jerk reaction to the proliferation of the virus and the fear that lockdowns can rapidly spread," said Andrew Lipow of Lipow Oil Associates in Houston.

The Netherlands went into lockdown on Sunday and the possibility of more COVID-19 restrictions being imposed ahead of the Christmas and New Year holidays loomed over several European countries.

U.S. health officials urged Americans on Sunday to get COVID-19 booster shots, wear masks and be careful if they travel over the winter holidays, with the Omicron variant raging across the world and set to take over as the dominant strain in the United States.

Oil prices fell despite Moderna (NASDAQ:MRNA) Inc's announcement on Monday that a booster dose of its COVID-19 vaccine appeared to be protective against Omicron in laboratory testing.

Meanwhile, OPEC+ compliance with oil production cuts stood at 117% in November, up 1 percentage point from the previous month, two sources from the group told Reuters, as output continues to lag agreed targets.

In the United States, energy companies added oil and natural gas rigs for a second week in a row.

The oil and gas rig count, an early indicator of future output, rose by three to 579 in the week to Dec. 17, representing its highest number since April 2020, energy services business Baker Hughes Co said in its closely followed report on Friday.

Oil prices plunge as Omicron's rapid spread dims fuel demand outlook
 

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Comments (5)
William Bailey
William Bailey Dec 20, 2021 1:15PM ET
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Omicron blamed … Opec will flood market with oil soon …but, blame Omicron Pursi i 8
Andrew Ulferts
Andrew Ulferts Dec 20, 2021 8:50AM ET
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Omicroc scariant.
Ron Love
Ron Love Dec 20, 2021 6:19AM ET
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I’m certainly not changing my driving habits over the common cold variant.
Robert Francis
Robert Francis Dec 20, 2021 1:06AM ET
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demand is low so we use the strategic reserve because??
Michael Redden
Michael Redden Dec 20, 2021 1:06AM ET
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us gov sells peaks too
Joyce Mitchell
Joyce Mitchell Dec 19, 2021 10:40PM ET
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Right on Lesko! Boycott Testing!!! It's the best weapon against gov't overreach. If I think I might be getting sick I stay home....100% effective!
 
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