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Title: Oil prices dive to two-month lows, spooked by new COVID variant

Nov 26, 2021 06:01AM ET

By: AnalysisWatch

Oil costs fell over 5% on Friday, hitting a two-month low, as another COVID-19 variant spooked investors and heightened fears that the supply surplus could swell in the first quarter.

Oil prices fell along with global equity markets (MKTS/GLOB) on fears that the variant, which the UK says is the most significant yet, could curtail travel and dampen economic growth and fuel demand.

By 1035 GMT, Brent crude had fallen $4.68, or 5.6 percent, to $77.54 per barrel.

US West Texas Intermediate (WTI) crude was $5.20, or 6.6%, lower at $73.19 a barrel after the Thanksgiving occasion in the United States on Thursday.

Investors were also watching China's reaction to the release of millions of barrels of oil from US strategic reserves in coordination with other major consuming nations as part of its efforts to cool prices.

An OPEC source said that according to the findings of an expert panel advising ministers of the Organisation of the Petroleum Exporting Countries, such a release is likely to increase supply in the coming months.

The Economic Commission Board extends an excess of 400,000 barrels each day (bpd) in December, ascending to 2.3 million bpd in January and 3.7 million bpd in February assuming devouring nations make the deliveries, the OPEC source said.

The forecasts cloud the outlook for the December 2 meeting of OPEC and its allies, known as OPEC+, where the gathering will talk about whether to change its arrangement to expand yield by 400,000 bpd in January and then some.

Iranian production was also in focus as indirect talks between Iran and the United States were due to resume on Monday on reviving the 2015 nuclear deal that could lead to the lifting of US sanctions on Iranian oil exports.

However, the failure of Iran and the International Atomic Energy Agency (IAEA) to reach even a modest agreement on monitoring Tehran's nuclear facilities this week does not bode well for next week's talks, according to Eurasia analyst Henry Rome.

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