Oil drops 3% due to anxiety compared to vaccine effectiveness

FILE PHOTO: Pipeline to Enbridge Inc's crude oil storage tanks.  at their tank farm in Cushing
FILE PHOTO: Pipeline to Enbridge Inc’s crude oil storage tanks. at their tank farm in Cushing, Oklahoma, March 24, 2016. REUTERS / Nick Oxford

November 30, 2021

By Florence Tan and Dmitry Zhdannikov

SINGAPORE/LONDON (Reuters) – Oil prices fell more than 3% on Tuesday after the CEO of Moderna cast doubt on the effectiveness of a COVID-19 vaccine against the coronavirus variant Omicron, rattling financial markets. and cause further worries about oil demand.

The head of drugmaker Moderna told the Financial Times that COVID-19 vaccines are not likely to be as effective against the Omicron variant of the coronavirus as they were against the Delta variant.

Brent crude oil futures fell $2.32, or 3.2%, to $71.12 a barrel at 0912 GMT after sliding to an intraday low of $70.52, the lowest since Jan. 1. 9.

U.S. West Texas Intermediate (WTI) crude oil futures fell $2.15, or 3.1%, to $67.80 a barrel, to a session low of $67.06, the lowest since August 26th.

Fed Chairman Jerome Powell will also tell US lawmakers later in the day that the variation could spur an economic recovery, prepared remarks show.

“The economic impact is driven by fear, and by the policy response… Fear is affecting travel. There are outright bans. However, the fear of being trapped causes travel plans to change,” Paul Donovan from UBS said in a note.

Oil fell about 12% on Friday along with other markets on concerns that a heavily surging Omicron copper would trigger fresh shutdowns and dent global oil demand. The severity of the new variant is still unknown.

With the demand outlook weakening, there are growing expectations that the Organization of the Petroleum Exporting Countries, Russia and their allies, collectively known as OPEC+, will delay their planned supply of another 400,000 bpd (bpd). bpd) in January.

“We think the group will aim to pause production increases due to the Omicron variant and the release of oil stocks by major oil consumers,” said Commonwealth Bank commodities analyst Vivek Dhar.

Pressure has increased in OPEC+, which is scheduled to meet on December 2, to review supply plans after the United States and other major oil consuming nations announced emergency crude stockpiles. issued last week to address rising prices.

“Following the release of global strategic stockpiles and the announcement of dozens of countries restricting travel… OPEC and its allies could easily justify a production shutdown,” said OANDA analyst Edward Moya. or even cut back a bit.”

However, Citi analysts expect OPEC+ to continue adding more barrels in January.

(Reporting by Sonali Paul and Florence Tan; Editing by Lincoln Feast, Ana Nicolaci da Costa, Himani Sarkar and Louise Heavens) Oil drops 3% due to anxiety compared to vaccine effectiveness

Bobby Allyn

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