Oil Futures Settle Sharply Lower On Demand Worries

Crude oil prices declined sharply on Friday amid concerns about the outlook for energy demand due to a rapid surge in Omicron variant of the coronavirus and reimposition of strict restrictions on movements in several countries.

West Texas Intermediate Crude oil futures for January ended lower by $1.52 or about 2.1% at $70.86 a barrel. WTI crude futures shed about 1.1% in the week.

Brent crude futures were down $1.48 or nearly 2% at $73.54 a barrel a little while ago.

Several countries in Asia and Europe are seeing continued surge in cases of the Omicron variant prompting governments to impose fresh restrictions to curb the spread of the pandemic.

Dr. Anthony Fauci, President Joe Biden’s top medical advisor, said that the U.S. is experiencing a resurgence of the delta variant and that omicron will become the dominant Covid-19 variant in the United States within a few weeks.

Fauci also said that some of the rapid at-home Covid-19 tests available in the U.S. may not accurately pick up the new super mutant Omicron variant.

The Organization of the Petroleum Exporting Countries, Russia and allies, together known as OPEC+, are likely to meet ahead of their scheduled January 4 meeting in the event of the demand outlook necessitating a review of of their production plans.

According to a report from Baker Hughes, the number of active drilling rigs in the United States rose by 3 this week. The total rig count increased to 579, up 233 from a year ago. Rigs drilling for oil rose by 4 to 475 while gas rigs fell by 1 to 104, the report said.

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