Oil prices suffer steepest monthly decline since March 2020

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Oil futures fell sharply on Tuesday, suffering their worst monthly drop since March 2020, with renewed pressure on prices after Moderna Inc’s chief executive warned that the vaccine was less effective against the Omicron version of the coronavirus. likely to cause COVID-19.

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West Texas Intermediate Crude for January Delivery CL00,
+1.98%

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CLF 22,
+1.98%
On the New York Mercantile Exchange, it fell $3.77, or 5.4%, to $66.18 a barrel. According to Dow Jones market data, the price is down about 21% on a month-to-month basis. They also settled at the lowest level since August 23.

Global Benchmark January Brent Crude BRNF22,
-3.91%,
ICE Futures Europe ended at $70.57 a barrel, down $2.87, or 3.9%, at the end of the trading session – up more than 16% for the month. February Brent BRN00,
+2.18%

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BRNG22,
+2.18%,
What is now the front-month futures contract, fell by $3.99, or about 5.5%, to $69.23 a barrel.

Front-end WTI and Brent crude futures marked their biggest monthly net and percentage declines since March 2020 – the same month the World Health Organization announced the start of the COVID-19 pandemic. WTI fell below zero dollar per barrel in April 2020.

“Covid-19 is again at the center of crude oil and other commodity losses – this time amid uncertainty around the newly identified Omicron variant,” Robby Fraser, Schneider Electric’s global research and analysis manager, said in a daily note.

,“COVID-19 is again at the center of crude oil and other commodity losses – this time amid uncertainty around the newly identified Omicron variant.”,


– Robbie Fraser, Schneider Electric

After Moderna’s mRNA, crude futures fell, with renewed global decline in equities,
-4.36%
Chief executive Stefan Bansel told the Financial Times that existing vaccines likely to be less effective against the Omicron variant discovered last weekend in southern Africa.

“This is raising concerns about the far-reaching mobility restrictions to counter Omicron variants,” Commodity Analyst Karsten Fritsch at Commerzbank said in a note. “It is not yet possible to predict exactly how big the impact will be on oil demand.”

The threat to oil demand is real, Lewis Dixon, senior oil market analyst at Rystad Energy, said in a note.

“Another wave of lockdowns could result in a 3 million bpd (barrels per day) reduction in oil demand in the first quarter of 2022 as governments prioritize health protection over reopening plans, of which already There is stated evidence, there is a delay in its reopening from Australia. To ban foreign visitors to Japan,” she wrote.

Oil dropped sharply on Friday after the variant was discovered in southern Africa, with the US benchmark falling 13%, with several countries moving to restrict flights from the region. Crude rose in Monday’s trade, but ended the session with modest gains before coming under fresh pressure.

The fall in prices and accompanying concerns about the variant’s effect on travel and activity are seen putting pressure on OPEC+ – which is made up of the Organization of the Petroleum Exporting Countries and its allies including Russia – to halt monthly increases in oil production. which would increase the production. Another 400,000 barrels per day in January.

OPEC+ is weighing its reaction to the US decision last week to release 50 million barrels of crude oil from its Strategic Petroleum Reserve – a move that coincided with releases in five other countries, including China and India.

“The biggest potential surprise or consequence this week will be if OPEC returns to production in response to the version,” said Christian Busken, director of real assets at the Fund Evaluation Group.

“If it is the Biden administration that wants lower oil prices, versus OPEC, which benefits from higher prices, OPEC currently holds all the cards,” he told Businesshala.

Ahead of the OPEC and non-OPEC ministerial meeting, OPEC is scheduled to hold technical meetings via videoconference on Wednesday and Thursday, with plans also on Thursday.

OPEC+ has excuse to halt oil production growth after COVID variant sparks crude plunge

“It’s almost unthinkable to stick with the planned 400,000 bpd increase given the latest market developments,” Fritsch said.

He said the US plan to issue strategic reserves was already set to expand supplies by about 850,000 bpd in January and February, which OPEC+ will have little to do with a planned production increase for two months. will be an option.

Oil could hit $150 a barrel with OPEC+ ‘in the driver’s seat’: JP Morgan

Back to Nymex, December Gasoline RBZ21,
-4.54%
fell 4.7% to $1.98 a gallon, down nearly 20% for the month, and December heating oil HOZ21,
-4.17%
Shed 4.1% to $2.064 per gallon, for a monthly decline of more than 17%. The December contract expired at the end of the season.

Jan Natural Gas NGF22,
+0.39%
After falling more than 11% on Monday, Tuesday closed at $4.567 per million British thermal unit, down 5.9%. Prices have dropped by about 16% for the month.

“Strong production growth and the outlook for mild weather for December are the main drivers for natural gas,” Kristin Redmond, commodities analyst at Schneider Electric, said in the daily note. He said the National Oceanic and Atmospheric Administration forecast above-normal temperatures for much of the US over the next six to 10 days.

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