There are oil wells in California.
David McNew is a photographer.
Oil prices fell Tuesday after comments by Moderna's CEO about existing vaccines' efficiency against Omicron renewed concerns over the potential economic impact of the coronaviruses variant.
Energy demand was expected to slow over the next few months, although this has not been reflected in crude futures. Major producers struggled this year to ramp up output to keep pace with a bounce-back in consumption, as prices are close to their highest in years.
The Omicron variant has spread rapidly since South African scientists discovered it last week.
Moderna boss Stphane Bancel said in an interview with the Financial Times that he expected the effectiveness of the existing vaccines to fall.
Bancel said there is no world where the effectiveness is the same level.
The price of crude was down 2.5%. It lost 14.5% in November, its biggest one-month drop since March 2020. The price of crude was 2.5% lower at $68.13 a barrel, heading for an 18% fall this month.
Michael Hewson noted that Bancel's tone was different from that of Pfizer and BioNTech, which had suggested that a vaccine could be modified quickly.
Hewson said that his candid comments have seen oil prices slide back sharply, as an increasingly jittery market react with concern to the prospects of further restrictions and lower demand.
Scott Gottlieb, director of Pfizer, told CNBC on Monday that three doses of the vaccine should offer a good degree of protection.
US President Joe Biden said that Omicron was not a cause for panic. His comments did not stop the decline in the oil market, especially with the meeting of the OPEC+ group of crude exporters due Thursday.
An agreement has been made between the Organization of the Petroleum Exporting Countries and Russia to increase crude output by 400,000 barrels a day. They are under international pressure to increase their increases to temper the rise in global energy prices.
Ole Hansen, chief commodities strategist at Saxo Bank, said that a surprise cut in prices by the Organization of the Petroleum Exporting Countries could prop up prices. A number of its members can't ramp up output quickly enough after years of under-investment, and a slowdown in global economic activity could weigh on demand for crude.
He said that the group may decide to delay the January production increase or temporarily cut production into a period that was already expected to see the return of a balanced market.
The risk of $90 oil has not gone away, but once again the timing has been postponed with the year looking like a relatively balanced one. The main worry is when the production capacity of the group is exhausted.
The group is expected to freeze production quota for January.
We expected the global oil market to move into surplus through 1H22 and anticipated that the Organization of the Petroleum Exporting Countries would sit out 1Q22. Recent developments have reinforced our view, according to a team led by analyst.
Business Insider has an original article.
