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Oil drops below $ 80 amid resurgence of European COVID fears

By on November 19, 2021 0

Oil and gas tanks are seen at an oil warehouse at a port in Zhuhai, China on October 22, 2018. REUTERS / Aly Song / File Photo

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  • Austria will enter full containment next week
  • Rising cases in Europe may lead to further restrictions
  • Major economies weighing on oil release to ease prices
  • Impact will likely be short-lived, Goldman says

LONDON, Nov. 19 (Reuters) – Oil prices fell below $ 80 a barrel on Friday as a further rise in COVID-19 cases in Europe threatened to slow the economic recovery as investors also weighed on a potential release of crude reserves by major economies to cool prices.

Brent crude was down $ 1.90, or 2.34%, to $ 79.34 a barrel at 1443 GMT. It had previously fallen to $ 78.15, its lowest since early October, after hitting $ 82.24, extending the volatility seen on Thursday.

U.S. West Texas Intermediate (WTI) crude for December delivery fell $ 1.97, or 2.5%, to $ 77.04 a barrel.

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The December WTI contract expires on Friday and most trading activity has moved to the January futures, which was down 2.4% to $ 76.52 per barrel.

Both Brent and WTI are set for a fourth week of decline.

Austria became the first country in Western Europe to re-impose a full coronavirus lockdown this fall to tackle a new wave of COVID-19 infections in the region that threatens to slow the economic recovery of recent months. Read more

Germany, Europe’s largest economy, has warned it may also have to move to a full COVID-19 lockdown. Read more

Brent has jumped nearly 60% this year as economies recover from the pandemic and the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC +, have risen their production only gradually.

“The (oil) market remains fundamentally in a good position, but lockdowns are now an obvious risk … if other countries follow Austria’s lead,” Craig Erlam, market analyst at OANDA, said in a statement. note.

Governments in some of the world’s largest economies were considering releasing oil from their Strategic Petroleum Reserves (SPRs) following a U.S. demand, first reported by Reuters, for coordinated action to cool the costs. Read more

Speculation of an outflow in the United States has already lowered oil prices by around $ 4 a barrel in recent weeks and additional supplies of up to 100 million barrels are already expected, oil analysts said. from Goldman Sachs in a note.

As a result, he said any release “would only provide a short-term solution to a structural deficit.”

OPEC + has stuck to its policy of gradually increasing oil production even as prices have risen, saying it expects supply to exceed demand in the first months of 2022.

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Additional reporting by Aaron Sheldrick; Editing by David Evans and Nick Zieminski

Our Standards: The Thomson Reuters Trust Principles.


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