Oil slides again on fears over Omicron, Biden's economy plan
BNN Bloomberg
Oil extended declines on concern over the rapid spread of the omicron virus variant and turmoil for President Joe Biden’s economic plans.
Oil extended declines on concern over the rapid spread of the omicron virus variant and turmoil for President Joe Biden’s economic plans.
Brent crude fell more than 3 per cent to trade near US$71 a barrel in London, though the commodity recouped some of the day’s losses after Moderna Inc. said its COVID-19 vaccine vastly increases protection against the new strain.
Pessimism nonetheless prevailed across financial markets, as rising infections from the U.S. to Europe prompt restrictions on air travel and stricter curbs on movement. While there’s no sign yet of fuel demand cratering as it did early last year, the outlook is increasingly fragile.
Economic sentiment took another setback as President Joe Biden’s US$2 trillion package of tax-and-spending was derailed by the surprise revolt of Senator Joe Manchin. Goldman Sachs Group Inc. economists cut their U.S. economic growth forecasts.
Oil’s market structure is also showing signs of weakness. The prompt timespread for Brent once again flipped into a bearish contango pattern on Monday, indicating the market is becoming oversupplied.
Bearish headwinds are mounting, moving into the holiday period, when thinner trading volumes can exacerbate prices swings. Demand in Asia is softening, central banks are pivoting toward tighter monetary policy to try and rein in accelerating inflation.
