Oil futures settled lower Thursday, with the U.S. crude benchmark putting an end to a three-session streak of gains that had lifted prices to a two-week high a day earlier. Restrictions recently imposed in parts of the world to combat the omicron variant of coronavirus were being blamed for putting some pressure on energy demand and crude oil prices. U.K. Prime Minister Boris Johnson on Wednesday recommended remote work where possible and advocated mask-wearing in public venues. Countries including Denmark and China also have imposed some level of mobility restrictions to limit the spread of the contagion.
A Japanese scientist found that the omicron variant is 4.2 times more transmissible in its early stage than the delta variant, according to a report from Bloomberg. Despite news that the variant may not be as destructive to oil demand as first feared, “more countries worldwide are reintroducing restrictions and other measures to curb climbing case numbers,” said Louise Dickson, senior oil markets analyst at Rystad Energy, in daily market commentary. That raises “fears that the global market may yet be adversely impacted, and consequently causing a bearish environment for oil prices.” The measures are being imposed even as a report on Wednesday from Pfizer and BioNTech SE said results from and “initial laboratory study” showed that their COVID-19 vaccine neutralized the omicron variant of the coronavirus after three doses, or the full two-dose regimen plus a booster shot.
West Texas Intermediate crude for January delivery , or 2%, to settle at $70.94 on the New York Mercantile Exchange, after rising on Wednesday by 0.4% to end at the highest level since Nov. 24 for a most-active contract, marking a third straight daily gain.
February Brent crude declined by $1.40, or nearly 1.9%, to end at $74.42 a barrel on ICE Futures Europe. That followed a 0.5% rise for the global benchmark in the prior session, which helped it notch its fifth straight gain and its highest finish since Nov. 25. Thursday’s loss marked the first session decline for Brent since Dec. 1, according to Dow Jones Market Data.
Meanwhile, U.S. oil inventory reports also were still being parsed as investors weighed concerns about the virus against supply-demand fundamentals. The Energy Information Administration reported that U.S. crude inventories fell by a 200,000 barrels for the week ended Dec. 3. That marked a second weekly decline, but it was smaller fall than the 1.2 million-barrel decline that analyst polled by S&P Global Platts had estimated.
EIA data also showed stocks in the U.S. Strategic Petroleum Reserve declined by 1.7 million barrels to 600.9 million barrels last week, while total domestic petroleum stocks inched up by 100,000 barrels to 11.7 million barrels per day. Crude stocks at the Cushing, Okla., Nymex delivery hub edged up by 2.4 million barrels for the week.