NEW YORK:Oil futures eased on Monday as new doubts emerged about the effectiveness of vaccines against the Omicron coronavirus variant, though OPEC predicted in its monthly report that the variant’s impact on fuel demand would be mild.
Brent futures fell 71 cents, or 0.9%, to $74.44 a barrel by 1:57 p.m. EST (1857 GMT), while U.S. West Texas Intermediate (WTI) crude fell 35 cents, or 0.5%, to $71.32.
The Omicron variant, reported in more than 60 countries, poses a “very high” global risk, with some evidence that it evades vaccine protection, according to the World Health Organization.
The Organization of the Petroleum Exporting Countries raised its world oil demand forecast for the first quarter of 2022 but left its full-year growth prediction steady, saying the Omicron variant would have a mild impact as the world gets used to dealing with the COVID-19 pandemic.
Governments around the world, including most recently Britain and Norway, were tightening restrictions to stop the spread of the Omicron variant.
At least one person died in Britain after contracting Omicron, the first publicly confirmed death globally from the swiftly spreading variant.
In China, a major manufacturing province, Zhejiang, was fighting its first COVID-19 cluster this year, with hundreds of thousands of citizens now in quarantine.
OPEC and its allies, a group known as OPEC+, will meet on Jan. 4 to decide on their output policy.
Iraq’s oil minister on Sunday said he expected OPEC at its next meeting to maintain its current policy of gradual monthly increases in supply by 400,000 barrels per day (bpd).
In Europe, natural gas prices surged 11% on Monday on colder forecasts and worries that Gazprom PAO’s Nord Stream 2 gas pipe from Russia to Germany will remain shut if Russia renews aggression against Ukraine.
That pipeline would help boost supplies of gas in Europe where stockpiles were at extremely low levels for this time of year.
Analysts have said those higher gas prices should support oil demand and prices as European manufacturers and power generators switch from scarce and expensive gas to oil to fuel their facilities.
The European Union said that any Russian aggression against Ukraine would trigger economic sanctions on Moscow. Russia said on Monday it may be forced to deploy intermediate-range nuclear missiles in Europe in response to what it sees as NATO’s plans to do the same.
Traders will also focus this week on monetary policy decisions expected to be taken by the European Central Bank (ECB), the U.S. Federal Reserve, the Bank of England and the Bank of Japan, potentially including early halts to stimulus packages.
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