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Oil prices deepen their losses to 4%, and Brent crude is less than $71 With growing fears of Omicron

  • 30 November, 2021
  • 5:56 pm EET

Oil prices deepened their decline by more than 4%, during trading today, Tuesday, with Brent crude falling below $ 71, with doubts about the effectiveness of Corona vaccines against the Omicron mutant.

The decline came after the president of Moderna Pharmaceuticals told the Financial Times that it was unlikely that Corona vaccines would be as effective against the Omicron mutant of the coronavirus, as they were against the Delta variant.

 

Oil Prices Today

Brent crude futures prices – for January 2022 delivery – fell by 3.8%, recording $70.68 a barrel.

The prices of West Texas Intermediate crude futures – January delivery – also decreased by 4.2%, recording $66.93 a barrel.

Oil prices witnessed a volatile session yesterday, Monday, as it started to rise, and both crudes rose by more than 6%, before reducing their gains at the end of the session and ending its transactions with an increase of about 2%.

Oil prices fell on Friday by about 13% along with other markets, on fears that the Omicron mutation could cause new shutdowns and affect global growth, hurting oil demand.

The World Health Organization said on Monday that the Omicron mutant poses a very high risk of increased infection, in conjunction with the tightening of travel restrictions in many countries, as it is still unclear how dangerous the new mutant is, and whether it can resist current vaccines.

 

Oil Demand

Amid the expectations of demand, expectations are growing that the Organization of Petroleum Exporting Countries, led by Saudi Arabia, and its external allies, led by Russia, in the OPEC+ alliance, will suspend plans to add 400,000 barrels per day of supplies in January.

“We believe the alliance will be leaning toward halting production increases temporarily in light of the omicron mutating, and withdrawals from the Strategic Petroleum Reserve, led by oil consumers led by the United States,” said Vivek Dar, commodities analyst at Commonwealth Bank.

Investors are awaiting data on oil inventories in the United States by the American Petroleum Institute later today, with the US Energy Information Administration to announce official figures tomorrow, Wednesday.

 

OPEC+ Meeting

Pressure is building within the OPEC+ alliance, set to meet next Thursday, December 2, to reconsider the supply plan after last week’s release of strategic oil reserves by the United States and other major oil consuming countries to tackle high prices.

“Following the releases of the Global Strategic Reserve and the announcement by dozens of countries to restrict travel to and from South Africa and neighboring countries, OPEC and its allies can justify stopping production, or even a slight production cut,” said analyst, Edward Moya.

However, Citibank analysts expect that OPEC+ will continue to add more barrels in January.

Citi calculates that the actual average monthly additions of OPEC+ amounted to 262,000 bpd instead of 400,000 bpd, given that many OPEC+ countries are not able to produce at their standards, because they have lost capacity due to lack of investment.

“This discrepancy means that withholding this amount of production will be largely meaningless in the global oil supply/demand balance,” the investment bank added in a note.

Among the factors weighing on the market is the possibility of resuming oil exports from Iran, after optimistic statements from diplomats, with the resumption of talks on Monday between world powers and Iran on reviving the nuclear deal.

 

SOURCE : REUTERS

 

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