Oil prices fell below $79 a barrel today, Friday, as a new increase in Covid-19 cases in Europe threatened to slow the pace of economic recovery.
This comes at a time when investors are studying the possibilities of moving the world’s major economies to withdraw from their strategic stocks of crude to calm energy prices.
Brent crude futures fell $2.44, or 3%, to $78.80 a barrel by 11:10 GMT, the lowest level since early October, after rising earlier to $82.24 to continue fluctuations on Thursday.
West Texas Intermediate crude futures for December delivery fell $2.30, or 2.9 percent, to $76.11 a barrel. The two crudes are heading to a fourth week of decline.
Austria became the first country in Western Europe to completely re-impose a nationwide lockdown to combat the coronavirus this fall, with a new wave of infections across the region threatening to slow the economic recovery of recent months.
Brent crude has risen about 60% this year as economies recover from the pandemic, while the Organization of Petroleum Exporting Countries (OPEC) and its allies – known as “OPEC Plus” (Opec +) – have gradually increased production.
Governments of some of the world’s largest economies are considering withdrawing from strategic oil reserves, at the request of the United States, in a coordinated move to cool prices.
The last time the United States led a coordinated withdrawal of strategic oil stocks was in 2011, when Libyan supplies were disrupted by the outbreak of the revolution that toppled the regime of Muammar Gaddafi.
Yesterday, Thursday, White House spokeswoman Jen Psaki said that President Biden’s national security team is in continuous discussions with partners to meet the demand for fuel.
But experts said that the impact of withdrawals from stocks on prices will be limited, in terms of time and size.
The American demand came from large consumers, after the OPEC Plus alliance rejected Biden’s call to increase crude pumping in markets that suffer from a lack of supplies at a time when the global economy is recovering from the Corona pandemic.
Since May 2020, the OPEC Plus alliance has relied on unprecedented restrictions on production, which were partially eased, at what major consumers considered insufficient, warning of the impact of these restrictions on global growth.
Meanwhile, the International Monetary Fund warned – today, Friday – that the momentum of economic growth in China is slowing, with continued uncertainty about the Corona pandemic and the early withdrawal of financial support programs.
The IMF said – in a statement after the end of a round of discussions in China within the Article IV consultations – the Chinese economy continued to recover, but the momentum is slowing due to the rapid withdrawal of policy support and the delay in the recovery of consumption amid the repeated outbreaks of Covid-19 and closure measures.