Oil dropped sharply as new COVID-19 strain increased concerns on the outlook for demand, sending global markets spiraling.
- Futures in New York plunged below $74 per barrel and the benchmark fell nearly 6%, the most since July.
- The emergence of a new strain of COVID-19 signals the biggest threat to the recovery in oil consumption for some months, as traders shifted to haven assets.
- The sharp decline in oil prices is the latest unexpected twist before a key OPEC+ meeting upcoming week.
- After the group announced the release of emergency supply, the possible severity of the new COVID-19 variant is the latest factor that the alliance will have to deal with when deciding on whether to lift output.
- Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd noted that there is a massive overreaction in the market.
OPEC+ could halt its current planned output increases of 400,000 per day. The Alliance will have to consider the internal forecasts posted before the news of the new covid-19 variant.
CL1! Down -7.45%, USOIL down -7.07%