Peter Nurse   

Investing.com — The likely recovery in demand was impeded by Monday’s weakness of oil prices, which were influenced by rising supply and rising Covid-19 claims, especially in Europe.

At 9:15 am ET (1415 GMT), the futures were 1.2% lower at $78.73/barrel, and futures declined 1.1% to $81.27 by 9/15 AM ET. 

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The recent sell-off in crude oil has been accompanied by an increase in the dollar, and speculations that President Joe Biden might allow oil to be released from the U.S. Strategic Petroleum Reserve, which could help cool the prices.

After the Organization of the Petroleum Exporting Countries, a group also known as OPEC+ rejected requests from a number of countries that they increase their production rate at a quicker pace than was previously agreed, the discussion about the U.S. potential to augment domestic supply began.

This stance will likely continue into next month. It is also adding pressure to Biden’s administration to act after Suhail Al-Mazrouei, UAE Energy Minister, stated Monday that all signs point to an excess of oil supplies in the first quarter 2022.

Mazrouei explained that they care about countries producing the product and don’t want to see global economic growth slow down. We cannot pump more if there’s no technical reason. “We are not a political organization. We will only make technical decisions.”

Baker Hughes energy services company said that the U.S.’s oil and rigs, which are early indicators of future output, increased for the third week straight by six to 556, its highest point since April 2020.

Other places in Europe are seeing an increase in Covid-19 cases. Austria and the Netherlands have announced partial lockdowns. These actions suggest that demand recovery during winter will be slow.

At an Abu Dhabi energy conference, Mohamed El-Erian, Chief Economic Advisor at Allianz (DE) said that some people have doubts about future demand, making it unlikely that oil prices will reach $100 per barrel.

“If you were to focus only on the supply side, you could get to oil at $100,” El-Erian said, ““But if you look at what is happening on the demand side, there you get some questions. Demand is robust today but will it be robust in six months’ time?”