Oil settles lower on oversupply concerns, strong dollar
Oil futures prices dropped toward $73 a barrel on Tuesday after the International Energy Agency (IEA) said the Omicron coronavirus variant is set to dent global demand recovery.
U.S. data showing producer prices at 11-year highs reinforced market expectations of faster stimulus tapering by the Federal Reserve, which meets this week. This supported the dollar and weighed on oil, which typically move inversely.
Brent crude futures fell 69 cents, or 0.9%, to $73.70.
U.S. West Texas Intermediate (WTI) crude futures settled down 56 cents, or 0.8%, at $70.73.
Oil markets polarized as OPEC brushes off omicron fears but investors stay wary
Oil market watchers are torn between dramatically different forecasts for crude prices, even after OPEC’s upbeat forecast for crude demand in 2022.
OPEC’s outlook sees the world consuming 99.13 million barrels per day of crude in the first quarter of 2022, an increase of 1.1 million barrels per day from its last forecast a month ago, showing a more relaxed outlook on Covid-19 risks.
The omicron variant’s impact is projected to be “mild and short-lived,” OPEC’s latest monthly report said, adding that the world is better equipped to manage the pandemic.
While the 13 member group of oil-producing states has not let fears of the omicron variant change its projected timeline for a return to pre-pandemic oil demand, the market is still feeling the weight of bearish sentiment.
International travel restrictions have increased, and some state and local leaders have re-imposed things like mask-wearing and regular PCR test mandates. The U.K. raised its Covid alert level, while its Prime Minister Boris Johnson warned of a “tidal wave” of the more transmissible omicron cases, although data on the severity of the variant is still unclear.
Reference: CNBC, Reuters
Thai
Eng