Crude oil prices dip on strong sell-off amid rising Omicron concern

Highlights

  • Crude oil prices settled lower on Wednesday.
  • Both the benchmarks have been under pressure for weeks.
  • Both the benchmarks have recorded the steepest monthly fall since March 2020.

Crude oil prices settled on Wednesday on the back of intense sell-offs, on worries that the latest variant of coronavirus could cut oil demand as the global supply builds. The prices went into the negative territory following US officials' statement that the Omicron variant of coronavirus is more transmissible than the older variants.

February delivery Brent Crude oil futures last traded at US$68.89 per barrel down 0.16%, whereas January delivery WTI crude oil futures traded 1.30% up at US$66.44 per barrel as of 2 December 2021 at 12:00 PM AEDT.

Crude oil is under pressure

Both the benchmarks have been under pressure for weeks, initially due to the plan of the US and other oil-consuming nations to release oil from their strategic reserves and now fears of Omicron dampened the oil demand, weighing its prices.

Oil extraction

Source: © Aneese | Megapixl.com

Market speculators who took long-term positions in crude oil this year on expectations of tight supply have shifted as fundamentals reversed.

Both the benchmarks have recorded the steepest monthly fall since March 2020 with WTI crude oil down by nearly 21% and Brent by 16%.

Bottom Line

Crude oil prices have registered the biggest monthly drop in the last month since March 2020 on the back of supply concerns amid rising cases of the new variant of coronavirus. The prices are additionally weighted by the plan of the US and other oil-consuming nations to release oil from their strategic reserves.

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