Oil prices dipped on Tuesday as investors fretted about demand following the reintroduction of curbs in Europe and Asia in response to an increase in coronavirus cases.
By 0401 GMT, Brent crude oil futures had fallen 34 cents, or 0.5 percent, to $74.05 per barrel, while US West Texas Intermediate (WTI) crude futures had fallen 35 cents, or 0.5 percent, to $70.94.
"While energy traders avoid betting against OPEC+, the short-term risks ranging from Omicron to Fed tightening are proving to be extremely disruptive to the short-term outlook for oil prices," said Edward Moya, senior analyst at OANDA.
"As the virus spreads across Europe, the impact is greater than anticipated, and when family gatherings for the holidays are factored in, the short-term outlook for the next month could be drastically reduced."
Governments throughout the world, most recently in the United Kingdom and Norway, have tightened regulations to halt the spread of the Omicron variety.
At least one person has died in the United Kingdom due to getting a form of the Omicron coronavirus; the first publicly verified death worldwide from the rapidly spreading strain.
In China, Zhejiang, a critical industrial province, is battling its first COVID-19 cluster this year, with tens of thousands of individuals in quarantined and virus-infected areas stopping business activities, reducing airline schedules, and canceling events.
The Asian Development Bank cut its growth predictions for developing Asia for this year and next Tuesday, citing risks and uncertainty associated with the Omicron coronavirus strain, which may also affect oil demand.
Nonetheless, the Petroleum Exporting Countries Organization increased its forecast for world oil demand in the first quarter of 2022. It maintained its timeline for returning to pre-pandemic levels of oil consumption, claiming that the Omicron coronavirus variant would have a minor and transient effect.
Meanwhile, supply is likely to grow, with output from the largest US shale region expected to reach a record high in January, according to a monthly prediction released Monday by the US Energy Information Administration.
