Brent Crude Extends Five Week Losses Over Demand Concerns

On Friday, oil prices recorded their largest one-day drop since April 2020 by falling about $10 a barrel, as a new COVID-19 variant spooked investors and added to concerns that a supply surplus could swell through 2022’s first quarter.

Oil fell with global equities markets on fears the new variant could decrease economic growth and fuel demand.

The United States, Britain and several European countries have restricted travel from southern Africa, where the variant was detected, as researchers sought to find out if the mutation was vaccine-resistant.

The World Health Organization has designated the new variant as “of concern,” according to the South African health minister.

Brent crude fell $9.21, or 11.2 per cent, to $73.02 a barrel. WTI crude was down $10.10, or 12.9 per cent, at $68.29 a barrel, after Thursday’s Thanksgiving holiday in the United States.

Both contracts were heading for their fifth week of losses and their steepest falls in absolute terms since April 2020, when WTI turned negative for the first time.

The variant in South Africa emerged over the US Thanksgiving Holiday, causing ructions in a market previously caught between producer and consumer nations.