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Crude oil prices tumbled Friday, with investors rattled that Europe’s latest wave of COVID cases, and a fresh lockdown in Austria, will cut into demand for the commodity.
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 became 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 the country’s fourth wave of the virus and said he would not rule out lockdowns at a news conference Friday. The government is also poised to announce restrictions for unvaccinated people.
“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 US 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 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.
Read: Head of Germany’s disease control agency declares ‘nationwide state of emergency’ over COVID
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Oil prices had rebounded Thursday, after dropping to their lowest levels in about six weeks on reports that China is planning a release of crude from its reserve and news that the Biden administration has been urging other countries to do the same.
On Friday, West Texas Intermediate crude for December delivery
CLZ21,
CL00,
slumped 3%, or $2.38, to $76.63 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 Brent crude
BRN00,
BRNF22,
also tumbled 3%, or $2.47, to $78.77 a barrel, after gaining 1.2% to settle at $81.24 a barrel on Thursday.
Among petroleum products December gasoline
RBZ21,
fell 3% to $2.220 a gallon and December heating oil
HOZ21,
dropped 3.2% to $2.301 a gallon.
December natural gas
NGZ21,
rose 1.1% to $5.048 per million British thermal units, up 1.8%.
