Crude oil futures on Monday were under early pressure, as COVID-fueled travel disruptions over the holiday raised fresh questions about demand for energy, highlighting what has been a seesaw shift in mood amid the spread of the omicron variant of the coronavirus that causes COVID-19.
The lower trading in crude prices to start the final week of 2021 comes as crude futures booked a 4% weekly rise during the week of Christmas, with U.S. markets closed on Friday in observance of the holiday.
The retreat in oil also comes ahead of the meeting of the Organization of the Petroleum Exporting Countries and its allies, forming a group known as OPEC+, which is set to gather Jan. 4.
“The group is expected to stick with its decision to raise oil output by a further 400k barrels a day, although some have argued they will be more cautious because of the virus situation,” wrote Fawad Razaqzada, market analyst at ThinkMarkets, in a note dated Friday.
“If they do stick with status quo, I think this will put some pressure on oil prices,” the ThinkMarkets analyst wrote.
West Texas Intermediate crude for February delivery
was trading 98 cents, or 1.3%, lower, to reach $72.81 a barrel on the New York Mercantile Exchange, pulling back after putting in a 4.3% weekly gain on Thursday, which pushed the U.S. benchmark contract to the highest finish since Nov. 24.
Meanwhile, Brent crude
the global benchmark, was trading 24 cents, or 0.3%, lower at $75.56 a barrel on ICE Futures Europe, following a 3.6% weekly finish on Friday, with ICE Europe market open on Christmas Eve.
Over the weekend, airlines canceled hundreds more flights, citing staffing problems tied to COVID, as the nation’s travel woes extended beyond Christmas, with no clear indication when normal schedules would resume.
More than 700 flights entering, leaving or flying within the U.S. were called off, according to the flight-tracking website FlightAware, wrote the Associated Press. Still, that figure was down from nearly 1,000 on Saturday. More than 50 flights had been canceled for Monday morning, with the omicron variant of the coronavirus blamed for staffing shortages that forced the cancellations.
Possibly adding to U.S. pressures on crude futures was last week’s report from Baker Hughes, which showed that U.S. oil rigs rose by 5 to 480 this week, the highest count in over a year.
“It is also worth keeping in mind that US rig counts have now risen to their highest levels since April 2020. So, expect to see more supplies hitting the market later in the year, both from the OPEC+ and non-OPEC producers. This should put downward pressure on oil prices,” Razaqzada wrote.