Oil Futures Settle Sharply Lower

Despite paring some losses, crude oil futures settled sharply lower on Monday, as a rapid surge in Omicron variant of the coronavirus and stricter restrictions on movements in several countries raised concerns about outlook for energy demand.

Several countries, including France and Austria, have already imposed stricter rules for travelers to curb the rising wave of infections.

Paris has canceled its New Year’s Eve firework celebration, while Germany, which has ruled out a Christmas lockdown, has warned a fifth wave could no longer be stopped.

French Prime Minister Jean Castex has warned that the Omicron variant is “spreading at lightning speed” and that it should be the dominant variant by the start of next year. The country has imposed restrictions on travelers from the United Kingdom.

West Texas Intermediate Crude oil futures for February ended down by $2.63 or about 3.7% at $68.23 a barrel, off the day’s low of $66.04.

Brent crude futures settled lower by about 2.7% at $71.52 a barrel, after touching a low of $69.28 a barrel in the session.

According to a report in Reuters, OPEC+ compliance with oil production cuts stood at 117% in November, up 1 percentage point from the previous month, as output continues to lag agreed targets.

In the United States, New York State broke a record for new infections for a third straight day.

An effective shutdown of the U.S. is probably unnecessary, though hospitals will be tested by the expected rush of Omicron cases, Anthony Fauci, who leads the National Institute of Allergy and Infectious Diseases, said.

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