Meanwhile, Saudis and Oman call for OPEC reconciliation: File Image/Pixabay
After causing two key crude benchmarks to fall about 1 percent last week due to the Organization of the Petroleum Exporting Countries' (OPEC) failed output talks, traders on Monday refocused their concerns on the spreading Covid variants in Asia, which have prompted renewed lockdowns in Tokyo - and as a result caused another 1 percent decline in prices.
Brent fell 63 cents, or 0.8 percent, to $74.92 per barrel by 1755 GMT, while West Texas Intermediate was at $73.78 per barrel, down 78 cents, or 1.1 percent.
John Kilduff, founding partner at Again Capital, said, “It has raised hackles in the market about demand recovery again: Asia is obviously essential, it’s a swing demand center, and this is a huge setback.”
John Kilduff, founding partner, Again Capital
This is a huge setback
Covid aside, leading energy companies are said to still be reluctant to spend even though crude prices have more than doubled from a year earlier: "The international oil companies are still rebuilding their balance sheets," said Brian Gilvary, CEO of the oil and gas division INEOS Energy.
Josu Jon Imaz, chief executive of Repsol, added, "Higher oil prices allow us to extract more value from our existing businesses, which in turn will generate more resources for our spending on transformation in line with our energy transition roadmap."
However, the overall recovery from the pandemic has caused a surge in U.S. oil mergers: total value of 40 reported deals last quarter was $33 billion,said Enverus Inc, up from $44.5 billion for all of last year.
As for the ramifications of the collapsed OPEC talks, Jim Ritterbusch, president of Ritterbusch and Associates, said, “The longer the standoff ... the greater the possibility of some sustained price weakness.”
To help prevent that scenario, Saudi Arabia and Oman on Monday joined Russia in calling for continued cooperation between OPEC members, most significantly the United Arab Emirates, to keep the oil market balanced, according to a joint statement issued by the Gulf states.