Oil prices deepened their losses by more than 1% during trading on Tuesday, with Brent crude falling below $ 74 a barrel, with concerns about demand, following the expectations of the International Energy Agency.
Crude’s performance comes as investors fret about demand after renewed restrictions in Europe and Asia amid an increase in coronavirus cases.
Oil prices today
Brent crude futures prices – for February 2022 delivery – fell by 1.2%, recording $73.49 a barrel, after rising above $75 earlier in the session.
The prices of West Texas Intermediate crude futures – January delivery – also decreased by 1.1%, recording $70.47 a barrel.
The International Energy Agency has lowered its estimates of global oil demand growth next year by 100,000 barrels per day, to be expected to rise by 3.3 million barrels per day.
The International Agency said in its monthly report, issued today, that the new increase in cases of the Corona epidemic may lead to a temporary slowdown in the recovery of global oil demand.
However, the Organization of the Petroleum Exporting Countries (OPEC) raised its forecast for global oil demand for the first quarter of 2022, and stuck to its timetable for a return to pre-pandemic levels of oil use, saying that the Omicron mutant will have a mild and short impact.
“Energy traders don’t want to bet on OPEC+, but all the short-term risks from the Omicron pivot are in line with the US Federal Reserve’s hawkish sentiment and are disrupting the short-term outlook for oil prices,” said Edward Moya, chief analyst .
“The virus that has spread across Europe is dealing a bigger blow than expected, and when family holiday gatherings count, the short-term outlook for the next month could wan.”
Governments around the world, including Britain and Norway recently, have tightened restrictions to stop the spread of the omicron mutant, Reuters reported.
At least one person has died in Britain after contracting the novel coronavirus, omicron, the first publicly confirmed death globally from the rapidly spreading strain of coronavirus.
In China, the main industrial province of Zhejiang is battling to prevent the spread of COVID-19, as tens of thousands of citizens in virus-hit quarantine areas are suspending business operations, cutting flights and canceling events.
Growth Outlook for Asia
The Asian Development Bank (ADB) on Tuesday trimmed its growth forecast for developing Asia for this year and next, to reflect risks and uncertainty caused by the coronavirus mutated Omicron, which could also hamper oil demand.
Meanwhile, supply is expected to increase with production of the Berman Basin, the largest US shale basin, expected to increase to a record level in January, according to a monthly forecast from the US Energy Information Administration on Monday.