Crude oil drops on rising coronavirus cases

Crude oil prices tumbled on Monday due to rising cases of Omicron variant of coronavirus variant that dented the economic activity. However, the drop in prices was offset by Kazakhstan and Libyan oil supply disruptions.  

March delivery Brent Crude oil futures last traded at US$81.51 per barrel down 0.33%, whereas February delivery WTI crude oil futures traded 0.25% down at US$78.70 per barrel as of 10 January 2022 at 12:10 PM AEDT.

Combination of factors driving oil prices

While the rising spread of new variants of coronavirus, more than 304.87 million people have been reported to be affected by coronavirus across the globe whereas, 5,834,506 have lost their lives, as per the estimates made by Reuters.

As a result of rising COVID-19 cases, employment in the US increased at a slower rate than expected in the last month. Additionally, the gains in having the job are expected to remain calm in the near term too amid rising coronavirus cases, disrupting economic activity.

Source: © Tebnad | Megapixl.com

A rise in oil and natural gas rig counts in 2021 by US energy firms reached from two to 588 in the week ending 7 January 2022, weighing oil prices.

On the flip side, the drop in production from Kazakhstan's Tengiz field due to disrupted train lines, following violence in the country related to a hike in fuel prices has helped to curb the oil supplies in the international market, buoying oil prices.

In addition to this, supply disruptions of 729,000bpd in Libya due to pipeline maintenance work have also boosted oil's bull run.

Bottom Line

Crude oil prices tumbled on Monday over a slowdown of economic activity due to rising concerns amid rising cases of Omicron variant of coronavirus. However, the drop in prices is partially offset by Kazakhstan's turmoil and Libyan oil supply disruptions.