Oil Futures Settle Lower On Concerns Over Outlook For Oil Demand

Crude oil futures settled lower on Tuesday amid concerns about the outlook for energy demand due to renewed restrictions on movement in several countries amid rising new cases of the Omicron variant of the coronavirus.

Oil prices were also weighed down by a firm dollar amid increasing prospects of the Federal Reserve resorting to a faster pace of tapering of its asset-buying program following data showing an acceleration in U.S. producer price inflation.

The International Energy Agency's report saying the new variant would slow a recovery in demand for crude contributed as well to the decline in oil prices. The IEA has cut its 2022 supply forecast from non-OPEC producers by 100,000 barrels a day and has also said global demand for oil will drop by 100,000 barrels a day from its earlier forecast.

West Texas Intermediate Crude oil futures for January ended down by $0.56 or about 0.8% at $70.73 a barrel.

Brent crude futures were down $0.94 or 1.25% at $73.45 a barrel a little while ago.

The Asian Development Bank today trimmed its growth forecasts for developing Asia for this year and next, citing risks and uncertainty brought on by the new Omicron coronavirus variant.

At the same time, OPEC left its global oil demand and supply forecasts for 2021 and 2022 unchanged in its closely-watched monthly report.

Traders also looked ahead to weekly oil reports from the American Petroleum Institute (API) and the U.S. Energy Information Administration (EIA). The API's report is due latet today, while the EIA will release its inventory data Wednesday morning.

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