U.S. oil prices plunged 20 percent in November, the biggest drop since March last year, on fears of a new blockade triggered by a mutated strain

Oil tumbled $2.87 to settle at $70.57 a barrel on Tuesday, after hitting $70.22, the lowest since August. Oil markets continue to weigh the impact of a mutated strain of COVID-19 as new travel restrictions threaten a rebound in global crude consumption. Meanwhile, Federal Reserve Chairman Jerome Powell said there was a case for an early shorting, weighing on oil prices.

The COVID-19 vaccine is unlikely to be as effective against the Omicron variant as it is against the Delta variant, the CEO of drugmaker Modena has told the Financial Times. Louise Dickson, senior oil market analyst at Rystad Energy, said the threat to oil demand was real, with another wave of lockdowns potentially cutting oil demand by as much as 3 million barrels a day in the first quarter of 2022, as governments prioritised health security over restart plans. Australia's delayed restart to Japan's ban on foreign tourists, the evidence is clear.

'It's about oil because if you start putting the brakes on economic growth, you start to see an impact on demand,' said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.

Expectations are rising that THE Organization of Petroleum Exporting Countries (OPEC) its Allies, including Russia, will suspend plans to increase production by 400,000 b/d in January. According to foreign media survey data, the implementation rate of Opec production cuts rose 118% in October to 120% in November. Among Opec members, Saudi Arabia Iraq posted big increases in output in November, while Angola Libya posted declines. That puts the lack of capacity in some oil-producing countries in the spotlight ahead of this week's policy meeting.

RBC Capital Markets analyst Helima Croft others wrote in a note to clients that the arrival of the Omicron mutation the subsequent drop in oil prices increase the likelihood that OPEC+ will suspend its monthly production increase of 400,000 BPD when it meets on Thursday. That appears to be the pause the group envisioned when it announced a gradual increase in production in July, with OPEC forecasters predicting stocks could rise following a coordinated release of crude the U.S. other consuming countries. However, OPEC+ is also likely to continue with planned supply increases to satisfy the White House avoid another release of reserves.

Earlier data the American Petroleum Institute (API) showed crude oil inventories fell 747,000 barrels in the week ended November 26, while gasoline stocks surged 2.155 million barrels, refined oil stocks rose 789,000 barrels Cushing crude rose 1.004 million barrels. Oil prices were little changed after the data.

The White House wants OPEC+ members to decide at this week's meeting to free up oil supplies to meet demand said it was frustrating to see crude prices fall without a corresponding drop in gasoline prices at the pump. The White House is in regular contact with OPEC members hopes they will take action at their policy meeting on Wednesday, Spokeswoman Jen Psaki said at a news briefing. We hope they will release supply to meet the demand of the market.

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Source: Huitong

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