Oil plunges 3% below $80/bbl on resurgent pandemic in Europe

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NEW YORK: Oil prices fell nearly 3% below $80 a barrel on Friday as a rise in COVID-19 cases in Europe threatened to slow the economic recovery, while investors slammed prices for cooling off major economies. Weighed the potential release of crude oil reserves.

Brent futures for January fell $2.35, or 2.9%, to $78.89 a barrel.

US West Texas Intermediate (WTI) crude for December fell $2.91, or 3.6%, to $76.10. WTI for January, which will soon be a US front-month, was up around $2.65, or 3.4%, at $75.78.

For the first time since March 2020, both the benchmarks have declined for the fourth consecutive week.

“The fear of the unknown is weighing heavily on market sentiment,” said Phil Flynn, senior analyst at Price Futures in Chicago. The concern is that we will get some sort of coordinated release next week during the Thanksgiving holiday, when volumes are usually low. .And there have been dramatic moves.”

Austria became the first country in Western Europe to reimpose a complete coronavirus lockdown this autumn to tackle a new wave of COVID-19 infections across the region.

Germany, Europe’s largest economy, warned that it too may have to go into complete lockdown.

Brent has risen nearly 60% this year as economies come back from the pandemic and as the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, have only gradually increased output .

“The (oil) market is still basically in good shape, but the lockdown now poses a clear risk … if other countries follow Austria’s lead,” OANDA market analyst Craig Erlam said in a note.

The governments of some of the world’s largest economies were considering releasing oil from strategic petroleum reserves (SPR) following a request from the United States, first reported by Reuters, for a coordinated move to cool prices. Was.

The White House on Friday again pressured the OPEC producer group to maintain adequate global supplies, days after the US raised higher energy prices to potentially release oil from strategic reserves with some of the world’s largest economies. discussed to reduce.

Oil analysts at Goldman Sachs said in a note that speculation about a US SPR release has already driven oil prices down by about $4 a barrel in recent weeks and the price of additional supplies of up to 100 million barrels previously. It is since.

As a result, it said any release would “provide only a short-term fix for a structural deficit.”

OPEC+ has stuck to its policy of gradually increasing oil output despite a rise in prices, saying supply is expected to outpace demand in the first months of 2022.

(Additional reporting by Aaron Sheldrick, Ron Busso and Scott DiSavino; Editing by David Evans, Nick Ziminsky, David Gregorio and Margarita Choy)

Disclaimer: This post has been self-published from the agency feed without modification and has not been reviewed by an editor

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