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Crude oil drops on demand concerns from new COVID variant as OPEC meeting ends next week

Crude oil prices fell on Friday, with investors selling off commodities after a new highly contagious strain of COVID was detected in South Africa.

West Texas Intermediate Crude for January delivery
CL00,-4.61%

CLF22,-4.61%

down $3.57, or 4.6%, to $74.78 a barrel. The contract fell 0.1% to $78.39 a barrel on the New York Mercantile Exchange on Jan Wednesday.

Friday will mark a short session after the Thanksgiving break, with US crude ending at 1:30 p.m.

January Brent Crude Oil
BRNF22,-4.06%

BRN00,-4.03%,
global benchmarks, fell $2.81, or 3.5%, to $78.14 a barrel, after ending Wednesday, making it 0.1% lower at $82.25 on ICE Futures Europe.

Oil drops, along with US stock futures and Asian stocks after discovered a new COVID variant with a high level of mutation in South Africa, where the number of cases has spiked in recent days. Investors pour money into gold
GC00,+ 1.33%

and other paradises like the Japanese yen
USDJPY,-1.14%.

Now known as B.1.1.529, this variant has also been detected in Botswana and Hong Kong in travelers who have visited South Africa, he said. The World Health Organization is holding an emergency meeting on Friday to assess the variant, which scientists are still uncertain about, is more lethal or just more contagious.

But the scientists say this is the most severe mutation to date, which could make it more contagious than the delta variant, and that could make the vaccine less effective.

Countries have taken precautions, with the UK banning visitors from South Africa and five other countries from Friday. Variation shock comes as Europe is facing a spike in cases in many countries, such as economic powerhouse Germany. Austria has restricted its population, while other countries are also imposing restrictive measures.

“Depending on the evolution of this virus-led sell-off and the extent of WHO concerns about it, the calculations surrounding the OPEC meeting,” said Jeffrey Halley, senior market analyst at OANDA. + may change next week.

“OPEC+ has repeatedly stated that one area for caution is that the Covid-19 resurgence erodes oil demand as the group ramps up production,” he told clients in a note. Halley added that OPEC+ is likely not going to increase production above its previously agreed 400,000 bpd target next week, “unless the market situation really deteriorates next week and oil prices fall further. much”.

Traders have questioned whether the Organization of the Petroleum Exporting Countries and its allies – or OPEC+ – will decide next week to scrap that production increase after several countries coordinated strategic reserve release, including the United States.

The cartel and its allies have previously pushed back against requests by the Biden administration and others to accelerate production increases. OPEC+ increased monthly production to 400,000 bpd as the organization lifted its previous production cuts.

Saudi Arabia and Russia are considering a pause in recent production increases, The Wall Street Journal reported on Wednesday, citing people familiar with the discussion.

Elsewhere in the energy space, January natural gas contract
QGF24,-0.73%

rose 1.1% to $5,165/million British thermal units. Petrol term in December
RBZ21,-4.64%

down 0.8% to $2.3197/gallon, while December heating oil
HOZ21,-4.55%

fell 3.8% to $2,224 per gallon.

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