Home / Markets / Commodities /  Brent crude extends decline with bearish headwinds mounting
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Oil extended declines as the rapid spread of the omicron variant of the virus increased concerns about the outlook for energy demand.

Futures in London fell below $72 a barrel after slipping 2.2% last week. Covid-19 infections are rising from the U.S. to Europe as authorities struggle to tame the spread of omicron. That’s led to some nations placing restrictions on air travel and there are fears that further lockdowns may be implemented, curbing the movement of people and sapping demand for crude and oil products.

The oil market structure is also showing signs of weakness. The prompt timespread for Brent once again flipped into a bearish contango on Monday, indicating oversupply could be on the horizon through early 2022.

Bearish headwinds are mounting for the crude market moving into the holiday period, when thinner trading volumes can exacerbate prices swings. Demand in Asia is softening, central banks are pivoting toward tighter monetary policy to try and rein in rising inflation, and President Joe Biden’s economic agenda saw a setback after Senator Joe Manchin rejected a spending package.

“We can look forward to a week of lot of volatility," said Jeffrey Halley, senior market analyst at Oanda Asia Pacific Pte. “But it’s dangerous to assume that oil will plunge further from here because OPEC+ is sitting there watching, and they have left themselves the room to react very quickly if they need to."

New York state broke a record for new infections and New York City Mayor Bill de Blasio called on the federal government to step up supplies of tests and treatments to the city amid a spike in infections caused by omicron. Germany, just recovering from a wave caused by the delta variant, is headed toward another surge caused by omicron, the health minister warned.


This story has been published from a wire agency feed without modifications to the text.

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