Futures Movers: Oil settles at a 7-week low as rising Europe COVID cases may hurt on demand
Crude-oil prices on Friday skidded lower, in response to a fresh lockdown in Austria, and rising cases in Europe, which could eventually chip away at demand for the commodity should more countries impose COVID-19 restrictions.
“Sentiment has turned bearish in Europe as Austria reimposing lockdowns has reminded investors that COVID waves can still disrupt the world economy,” said Colin Cieszynski, chief market strategist at SIA Wealth Management, in a daily note.
On Friday, West Texas Intermediate crude for December delivery
CLZ21,
-3.67%
CL.1,
-3.67%
slumped 3.1%, or $2.43, to $76.58 a barrel. Crude rose 0.8% to settle $79.01 a barrel on Thursday, after touching an intraday low of $77.08. The December contract expires at the end of Friday’s trading session. January WTI crude
CLF22,
-3.41%,
which will become the front month, traded at $76.25, down $2.16, or 2.7%.
““Sentiment has turned bearish in Europe as Austria reimposing lockdowns has reminded investors that COVID waves can still disrupt the world economy.””
— Colin Cieszynski, SIA Wealth Management
January Brent crude
BRN00,
-0.34%
BRNF22,
-0.34%
tumbled 2.6%, or $2.11, to $77.13 a barrel, after gaining 1.2% to settle at $81.24 a barrel on Thursday.
Austria’s government announced Friday that the nation will enter a 10-day lockdown that could stretch to 20 days, in a bid to control spiraling COVID cases. The country had earlier this week become the first European country to restrict movement for unvaccinated people. Austria’s vaccination rate is among the lowest in the region at 65%.
Austria and Germany have seen record COVID cases this week, and investors were also rattled after Health Minister Jens Spahn reportedly spoke of a grave situation amid a new wave of infections, and he could not rule out lockdowns at a news conference Friday. The government is also poised to announce restrictions for unvaccinated people.
Read: Head of Germany’s disease control agency declares ‘nationwide state of emergency’ over COVID
“Oil has been declining over the last week as demand forecasts have been pared back, OPEC and the IEA have warned of oversupply in the coming months and the U.S. has attempted to coordinate an SPR release with China and others,” said Craig Erlam, senior market analyst at OANDA, in a note to clients.
The U.S. and global crude futures benchmarks are trading at their lowest levels since early October, with WTI down more than 5% for the week, and Brent eying a loss of more than 3% from the week-ago settlement.
“The market still remains fundamentally in a good position but lockdowns are now an obvious risk to this if other countries follow Austria’s lead,” Erlam said, adding that oil prices look more likely than a day ago to slide toward the mid-$70s region, especially if Germany announces similar measures.
Among petroleum products Friday, December gasoline
RBZ21,
-3.76%
fell 3.2% to $2.22 a gallon and December heating oil
HOZ21,
-4.09%
dropped 3.2% to $2.308 a gallon, with both contracts on track for losses of around 4% for the week.
Read: Retail gasoline prices stand just pennies below their highest Thanksgiving price on record: report
December natural gas
NGZ21,
+3.45%
rose 0.9% to $4.943 per million British thermal units, after briefly tapping a high of $5.007. Prices traded more than 3% higher for the week.
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