by Laura Sanicola
(Reuters) – Oil futures prices dropped to $73 a barrel on Tuesday after the International Energy Agency (IEA) said the Ômicron coronavirus variant could hamper a recovery in global demand.
US data showing producer prices at 11-year highs bolstered market expectations of a faster reduction in stimulus by the Federal Reserve, which meets this week. This supported the Dollar and weighed on Crude Oil, which normally moves in reverse.
Brent crude futures fell $0.69, or 0.9%, to $73.70. US crude oil (WTI) retreated $0.56, or 0.8%, to $70.73.
The US dollar came close to a one-week highs on Tuesday against a basket of major currencies, boosted by producer price data.
“As an accelerated Fed cut becomes more likely, US interest rates tend to rise, pushing additional strength to the dollar, forcing oil prices to fall,” said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.
On Tuesday, the World Health Organization said the Ômicron variant was spreading at “unprecedented” speed, causing markets to fall further.
“The rise in new Covid-19 cases should temporarily slow, but not increase, the ongoing recovery in oil demand,” the Paris-based IEA said in its monthly oil report.[IEA/S]
(Additional reporting by Ron Bousso and Jessica Jaganathan)
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