Oil prices plunge to two-month low on COVID-19 variant, excess nervousness

An oil tanker queues in the ocean outside the Port of Long Beach-Port of Los Angeles complex, amid the coronavirus disease pandemic (COVID-19), in Los Angeles, California, United States, April 7, 2021. REUTERS / Lucy Nicholson / File Photo

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  • New variant of COVID-19 detected in South Africa
  • Investors watch China for any release of reserves
  • OPEC panel sees surplus increase in first quarter

LONDON, Nov. 26 (Reuters) – Oil prices plunged about 6% on Friday, hitting a two-month low as a new variant of COVID-19 scared investors and added to fears that a surplus of supply does not swell in the first trimester.

Oil has fallen along with global stock markets over fears that the variant will dampen economic growth and fuel demand. Britain and European states have restricted travel from southern Africa, where the variant has been detected. Read more

Brent crude fell $ 5.40, or 6.5%, to $ 76.82 a barrel at 1452 GMT.

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U.S. West Texas Intermediate (WTI) crude was down $ 5.82, or 7.4%, to $ 72.57 a barrel, following Thursday’s Thanksgiving holiday in the United States.

Both contracts are heading for their fifth week of losses and their biggest drop in absolute terms since April 2020, when WTI first turned negative.

Investors were also monitoring China’s response to the US release of millions of barrels of oil from strategic reserves in coordination with other major consuming countries, as part of its attempt to cool prices. Read more

Such a publication is likely to boost supplies in the coming months, an OPEC source said, based on the findings of a panel of experts advising ministers of the Organization of the Petroleum Exporting Countries . Read more

The Board of the Economic Commission expects a surplus of 400,000 barrels per day (bpd) in December, reaching 2.3 million bpd in January and 3.7 million bpd in February if consuming countries continue the exits, the OPEC source said.

The forecast darkens the outlook for a December 2 meeting of OPEC and its allies, known as OPEC +, when the group will discuss whether to adjust its plan to increase production of 400,000 bpd in January and beyond.

“OPEC’s initial assessment of the coordinated release (of stocks) and sudden appearance of a new variant of the coronavirus raises serious concerns about economic growth and the oil balance in the coming months,” said said PVM analyst Tamas Varga.

Iranian production was also at the center of concerns, with indirect talks set to resume Monday between Iran and the United States on the relaunch of a 2015 nuclear deal that could lead to the lifting of US sanctions on Iranian oil exports. . Read more

However, the failure of Iran and the International Atomic Energy Agency to reach even a modest agreement on monitoring Tehran’s nuclear facilities this week does not bode well for next week’s talks, a Eurasian analyst Henry Rome said.

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Reporting by Shadia Nasralla; Additional reporting by Florence Tan in Singapore; Editing by Edmund Blair and Louise Heavens

Our Standards: Thomson Reuters Trust Principles.

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