2021.11.3019:10:00UTC+00Crude Oil Futures Settle Sharply Lower On Demand Worries

Crude oil prices declined sharply on Tuesday amid fresh concerns about the outlook for oil demand after Moderna's CEO said existing vaccines are likely to be less effective against the new Omicron variant of the coronavirus.

The dollar's rebound into positive territory, albeit for a brief while, further weighed on oil prices.

The dollar recovered after Federal Reserve Chairman indicated the central bank could hasten a tightening of monetary policy.

Powell told the Senate Committee that he thinks reducing the pace of monthly bond buys can move more quickly than the $15 billion a month schedule announced earlier this month.

With several countries reporting cases of the new variant, is looks more countries are likely to impose stricter restrictions of movements to curb the spread of the virus.

Possibility of border closures to curb the spread of the infection is likely to result in a significant drop in demand for jet fuel.

West Texas Intermediate Crude oil futures for January ended down by $3.77 or about 5.4% at $66.18 a barrel, the lowest settlement in about three months.

WTI crude futures shed as much as 21% in November, the biggest monthly decline in about 18 months.

Brent crude futures were down $3.70 or 5.05% at $69.52 a barrel a little while ago.

Moderna's CEO Stephane Bancel expressed apprehensions about the effectiveness of existing vaccines against the newly identified Omicron variant.

Bancel said in an interview to the Financial Times that it will take a couple of weeks to determine how much the mutations have affected the efficacy of the vaccines currently available in the market.

"Depending on how much it dropped, we might decide on the one hand to give a higher dose of the current vaccine around the world to protect people. Maybe people at very high risk, the immunocompromised, and the elderly should need a fourth dose," he said.

Meanwhile, markets now expect the Organization of the Petroleum Exporting countries, Russia and their allies, together called OPEC+, will put on hold plans to add 400,000 barrels per day (bpd) of supply in January.