After a brief respite on Monday, oil prices plunged again early on Tuesday as the market continues to fret about the potential impact of the new COVID variant Omicron on economies and oil demand.
Oil prices are set for a 20-percent slide for the month of November, the worst monthly drop in crude benchmarks since March 2020 at the start of the pandemic.
As of 10:25 a.m. EST on the last day of November, WTI Crude prices were down by 3.02% at $67.87, and Brent Crude had dipped 3.24% to $71.06.
Oil prices had recovered on Monday a small part of the losses from Friday but fell again on Tuesday after Moderna's chief executive Stéphane Bancel told the Financial Times that existing vaccines could see "a material drop" in their efficacy against Omicron.
Pfizer, however, said on Monday that its vaccine would likely work on the Omicron variant, with CEO Albert Bourla telling Bloomberg he doesn't believe the variant would fully escape protection with existing vaccines. Related: Oil Prices Bounce Back After 'Black Friday' Collapse
Yet, considering that it's still early days in the research of Omicron and its characteristics, uncertainty weighs on markets, including on the oil market.
"Brent crude oil already heading for its biggest monthly loss since March 2020 trades below its 200-day moving average for the first time in a year, a sign that more weakness may lie ahead, thereby raising the prospect for OPEC+ deciding to pause or perhaps even make a temporary production cut," Saxo Bank said in a Tuesday note.
OPEC+ meets on Thursday to decide production levels for January. The group has already postponed a technical panel meeting from Monday to Wednesday to have more time to assess the potential impacts of the Omicron variant on oil demand.
Alongside oil prices, the U.S. natural gas benchmark, Henry Hub, was also plunging early on Tuesday, down by over 6% to $4.537 per million British thermal units (MMBtu)-the lowest level in three months, on the back of forecasts of a warmer-than-expected winter.
By Tsvetana Paraskova for Oilprice.com
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Comments
Until then, concerns and fear about the new variant will continue to drag oil prices down despite the robustness of both the global economy and the global oil demand.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Long US Treasuries strong buy as everyone goes back to front running the Fed.