Crude-oil prices settled at their lowest in about seven weeks on Friday, down a fourth straight week to post the longest streak of declines in almost 20 months.
Prices took a hit in response to a fresh lockdown in Austria, and rising COVID cases in Europe, which could eventually chip away at demand for the commodity should more countries impose COVID-19 restrictions.
“Sentiment has turned bearish in Europe as Austria reimposing lockdowns has reminded investors that COVID waves can still disrupt the world economy,” said Colin Cieszynski, chief market strategist at SIA Wealth Management, in a daily note.
On Friday, West Texas Intermediate crude for December delivery CLZ21 CL.1, -3.67% slumped 3.7%, or $2.91, to settle at $76.10 a barrel on the contract’s New York Mercantile Exchange expiration day. January WTI crude CLF22, -3.48%, which is now the front month, settled at $75.94, down $2.47, or nearly 3.2%.
““Sentiment has turned bearish in Europe as Austria reimposing lockdowns has reminded investors that COVID waves can still disrupt the world economy.””
The U.S. crude benchmark settled at its lowest since Oct. 1, down 5.8% for the week, based on the front months, while Brent crude marked its lowest finish since Sept. 30, losing 4% from the week-ago settlement, according to Dow Jones Market. Both benchmarks were down a fourth week in a row, the longest losing streak since the period ended March 27, 2020.
“There have certainly been multiple bearish fundamental developments for the energy market over the last two weeks, including the discussion of coordinated oil reserve releases among major oil consumers around the globe and the uptick in COVID fears centered in Europe,” said Tyler Richey, co-editor at Sevens Report Research.
Still, it may be too early to declare a top in the oil market as the latest pullback has “so far resembled a healthy, corrective pullback in an otherwise still upward trending oil market,” he told MarketWatch.
Austria’s government announced Friday that the nation will enter a 10-day lockdown that could stretch to 20 days, in a bid to control spiraling COVID cases. The country had earlier this week become the first European country to restrict movement for unvaccinated people. Austria’s vaccination rate is among the lowest in the region at 65%.
Austria and Germany have seen record COVID cases this week, and investors were also rattled after German Health Minister Jens Spahn reportedly spoke of a grave situation amid a new wave of infections, and he could not rule out lockdowns at a news conference Friday. The government also announced restrictions for unvaccinated people.
“Oil has been declining over the last week as demand forecasts have been pared back, OPEC and the IEA have warned of oversupply in the coming months and the U.S. has attempted to coordinate an SPR release with China and others,” said Craig Erlam, senior market analyst at OANDA, in a note to clients.
“The market still remains fundamentally in a good position but lockdowns are now an obvious risk to this if other countries follow Austria’s lead,” Erlam said, adding that oil prices look more likely than a day ago to slide toward the mid-$70s region, especially if Germany announces similar measures.
Among petroleum products Friday, December gasoline RBZ21, -3.81% fell 3.6% to $2.212 a gallon and December heating oil HOZ21, -4.22% dropped 3.8% to $2.293 a gallon, with both contracts posting losses of more than 4% for the week.
December natural gas NGZ21, +3.57% rose 3.3% to $5.065 per million British thermal units, with prices 5.7% higher for the week.