Oil tumbles by the most in 4 months after new Covid variant heightens fears over global demand outlook

Oil wells at near Moorpark, California.

Oil fell by more than 6% on Friday, as investors ditched riskier assets after the emergence of a new Covid variant.
Both Brent and WTI futures were heading for their largest one-day fall since mid-July this year.
“We can very, very quickly go from a very tight market to an oversupplied market,” Saxo Bank’s Ole Hansen said.

Oil prices were already heading for a weekly loss, after the United States released some crude from its Strategic Petroleum Reserve to try to temper sky-high energy prices.

But after South African scientists said they had detected small numbers of a new variant of COVID-19 that could prove more transmissible, investors dumped crude oil futures and equities on Friday in favor of perceived safe-haven assets.

The variant — called B.1.1.529 — has a “very unusual constellation” of mutations, meaning the body’s immune response may not kick in and vaccines may be less effective against it, scientists told reporters at a news conference, according to Reuters. The World Health Organization has called a special meeting Friday to discuss the new variant.

The UK banned flights from six African countries in response, underlining worries about the impact of the new variant on economic growth. In recent weeks, Europe was the focus of concern as COVID-19 cases surged, leading to lockdowns and restrictions in Austria, Italy and other countries. Earlier this week, the WHO warned the coronavirus could claim another 700,000 victims by March. 

Brent crude futures were last down 5.7% on the day, set for their biggest one-day fall since mid-July, while West Texas Intermediate crude was 6.8% lower at $73.00 a barrel. 

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Source:: Businessinsider

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