LONDON: Oil prices fell on Friday, heading for a slight decline during the week, amid fears that the slowdown in the spread of the omicron COVID-19 variant could affect demand.
Brent crude futures fell 1.5% to $ 73.88 a barrel at 1:10 p.m. Riyadh time, while U.S. West Texas Intermediate (WTI) crude fell 1.4% to 71, 40 dollars a barrel. Both benchmarks are heading for a weekly loss of 1.4%.
In Denmark, South Africa and the UK, the number of new omicron cases is doubling every other day.
Danish Prime Minister Mette Frederiksen warned Thursday that the government could impose new restrictions to limit the spread of omicron.
In the United States, the rapid spread of the omicron variant has led some companies to suspend plans to return workers to offices.
âMessages of caution and warnings of a worsening wave of COVID are starting to ring louder as the holiday season approaches, dampening market sentiment,â said Vandana Hari, analyst energy at Vanda Insights. “Crude could remain in a sustaining configuration, albeit with a lot of price volatility around the mid-point, in trading thinned out during the holidays over the next two weeks.”
The Organization of the Petroleum Exporting Countries, Russia and their allies, known together as OPEC +, have said they could meet before their meeting scheduled for Jan. 4 if changing demand prospects warrant a shift. reconsidering their plan to add 400,000 barrels per day of supply. in January.
However, Leonid Fedun, vice chairman of Russian oil major Lukoil, said on Friday he expected OPEC + to stick to its decision to increase oil production by 400,000 bpd every month. at its January meeting.
“I don’t see any deviation from the program,” Fedun told reporters when asked about his expectations for the next OPEC + meeting.
He also said Lukoil would not reach pre-pandemic oil production levels in April, when the OPEC + deal is expected to be phased out.
But despite omicron’s threats to demand, Goldman Sachs said on Friday that the new variant had limited impact on mobility or demand for oil, adding that it expects oil consumption to hit rock bottom. record levels in 2022 and 2023.
South Africa’s health minister said on Friday the government believes vaccines and high levels of pre-COVID-19 infection are helping keep the disease milder in a wave driven by the omicron variant.
There have been early anecdotal accounts suggesting that the omicron variant causing the fourth wave, which saw the country report a record number of daily infections earlier this week, is causing less severe disease than previous variants in South Africa, but scientists say it is too early to draw firm conclusions.
“We think it may not necessarily just be that omicron is less virulent, butâ¦ the vaccine coverage (and)â¦ the natural immunity of people who have been in contact with the virus also adds to protection, “Health Minister Joe Phaahla said at a press conference. “That’s why we see mild illness.”
The benchmarks Brent and WTI both gained around 2% on Thursday, supported by record implied demand in the United States and a weaker dollar as the Bank of England surprised markets with a rate hike, adopting a more hawkish stance than the Federal Reserve.