Oil prices drop 2% as rapid Omicron spread dims fuel demand outlook
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SINGAPORE - Oil prices slumped by about 2% early on Monday as surging cases of the Omicron coronavirus variant in Europe and the United States stoked investor worries that new restrictions on businesses to combat its spread may hit fuel demand.
Brent crude futures fell $1.36, or 1.9%, to $72.16 a barrel by 0036 GMT while U.S. West Texas Intermediate (WTI) crude futures fell $1.51, or 2.1%, to $69.35 a barrel.
"Today's Asia ... weak sentiment in oil prices seems to go in line with a weakness seen in the S&P 500 and Nasdaq 100 e-mini futures," said Kelvin Wong, market analyst at CMC Markets.
"(This is) due to fears of impending restrictions on economic activities to contain the current increasing spread of the COVID-19 Omicron variant worldwide which may increase the risk of demand slowdown."
The Netherlands went into lockdown on Sunday and the possibility of more COVID-19 restrictions being imposed ahead of the Christmas and New Year holidays loomed over several European countries.
In the United States, White House medical adviser Dr. Anthony Fauci urged people travelling to visit loved ones to get booster shots and always wear masks in crowded public spaces.
Meanwhile, U.S. energy firms this week added oil and natural gas rigs for a second week in a row.
The oil and gas rig count, an early indicator of future output, rose by three to 579 in the week to Dec. 17, its highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.
Still, lower exports are expected from Russia with exports and transit of oil from the country planned at 56.05 million tonnes in the first quarter of 2022 versus 58.3 million tonnes in the fourth quarter of 2021, a quarterly export schedule seen by Reuters showed on Friday.
