Oil prices fell on Friday and set for a tight week’s loss, as rising cases of the Omicron variant raised fears that new restrictions could hit fuel demand, and a weaker dollar generally supported commodity market.
Brent crude futures fell 59 cents, or 0.8%, to $74.43 a barrel at 0707 GMT, while West Texas Intermediate (WTI) crude futures fell 67 cents, or 0.9%, to $71.71 a barrel.
Brent and WTI gained nearly 2% on Thursday, supported by record US demand and a weak US dollar, as the Bank of England surprised markets with a rate hike and the Federal Reserve took a more hawkish stance.
Brent is headed for a 1% loss this week, while WTI is poised to end the week almost flat.
The number of new Omicron cases is doubling every two days in Denmark, South Africa and the United Kingdom. Denmark warned on Thursday that further restrictions could be introduced to limit the spread of Omicron.
In the United States, the rapid spread of the Omicron variant is causing some companies to halt their plans to return their employees to offices.
With the end of the year holiday season approaching, messages about the need to watch out for the worsening COVID wave are getting louder, dampening market sentiment. Crude oil could remain in hold mood for the next few weeks in holiday-decreased trading, despite price volatility.
The Organization of the Petroleum Exporting Countries, Russia and its allies said they could meet before their agreed January 4 meeting if changes in the demand outlook require a review of their plans to add 400,000 bpd to the daily supply.
The tightness in supply is expected to ease with the addition of 400,000 barrels per month (bpd) from OPEC+ and 11.7 million barrels per month of US oil production.
Oil prices fell from multi-year highs in the early fourth quarter due to improved supplies. But some analysts say Omicron has limited impact on mobility or oil demand, and oil consumption is expected to hit record levels in 2022 and 2023.