Brent Crude Tumbles More Than 3% as Bearish Headwinds Mount - Bloomberg

Brent Crude Tumbles More Than 3% as Bearish Headwinds Mount - Bloomberg

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Brent for February settlement lost 3.3% to $71.07 a barrel on the ICE Futures Europe exchange as of 7:35 a.m. London time after declining 2% on Friday. The prompt timespread was 1 cent in backwardation, compared with 30 cents at the start of the month. West Texas Intermediate for January delivery, which expires Monday, slid 3.7% to $68.25 on the New York Mercantile Exchange. The more active February contract dropped 3.7% to $68.09.

Oil extended declines -- falling more than 3% -- as the rapid spread of the omicron virus variant raised concern over the demand outlook.

Futures in London tumbled near $71 a barrel after dropping 2.2% last week. Infections are rising from the U.S. to Europe as authorities struggle to tame the spread of omicron. That’s led to restrictions on air travel and stricter curbs on movement, creating fears that will flow through to weaker energy demand.

Oil’s market structure is also showing signs of weakness. The prompt timespread for Brent once again flipped briefly into a bearish contango pattern on Monday, indicating the market is becoming over-supplied.