Oil stable, rises amid rising coronavirus cases causing demand worries

Crude oil prices were little changed on Friday after leveling off earlier big gains amid growing concerns that a rise in coronavirus cases and a new variant could reduce global oil demand.

Earlier in the day, oil prices rose more than $2 a barrel after the OPEC producer group said it could review its policy to increase output as soon as possible if a rise in pandemic lock-ins stifles demand.

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Brent crude futures rose 21 cents, or 0.3%, to $69.88 a barrel, while WTI crude fell 24 cents, or 0.4%, to $66.26 a barrel.

Both benchmarks declined for the sixth consecutive week for the first time since November 2018, and both remained in a technical oversold zone for the sixth consecutive day for the first time since September 2020.

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"Plenty to blame for the big downturn in energy," said Bob Yauger, director of energy futures at Mizuho in New York, noting the rise in coronavirus cases , the US jobs report disappointed and OPEC stuck to its plan to increase output in January.

The Organisation of Petroleum Exporting Countries, Russia and allies, a group known as OPEC , surprised the market on Thursday when they did not backtrack on their plans to increase supply by 400,000 barrels per day (bpd) in January.

But OPEC left the door open for a quick policy change if demand declines because of measures to curb the spread of a variant of the Omicron coronavirus . They said they could meet again before the next scheduled meeting on 4 January.

Asset markets have been rocked all week by the emergence of Omicron and rumours that it could trigger new restrictions and reduce fuel demand.

The World Health Organisation has urged countries to vaccinate their people to fight the virus, saying travel restrictions are not the answer.

In the United States, the sixth state, Nebraska, reported the Omicron variant after six confirmed cases of the highly contagious strain were found.

Wall Street also reversed direction after opening higher, with the Nasdaq index falling more than 2% on jobs data and uncertainty over the Omicron option and the Federal Reserve's policy tightening course.

US job growth slowed considerably in November amid job cuts in retailers and local government education.

Meanwhile, US drillers kept the number of oil rigs unchanged this week after previously adding rigs for five straight weeks to their highest level since April 2020, according to energy company Baker Hughes Co.

Separately, global markets should not expect an increase in oil from Iran in the near future.

Indirect US-Iran negotiations to salvage the 2015 Iran nuclear deal were on the brink of a crisis on Friday as they broke off until next week.

 

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