By Barani Krishnan

Investing.com – It ain’t over till it’s over, ace baseballer Yogi Berra said. For oil, both the fears over the Omicron wave and the late market downturn of the year aren’t over.

Benchmark crude futures traded on both sides of the Atlantic were down about 4% on Monday, extending last week’s downturn, as the latest wave of Omicron washed ashore in Europe and the United States, adding dramatically to Covid case counts and hospitalizations.

Death rates remained unalarming, provoking angry reactions from those opposed to fears over the pandemic, including the so-called anti-vaxxers and bulls across energy markets who view the new demands, safeguards and restrictions put on society as a conspiracy to kill this year’s oil rally.

“The hit to the oil market may not be over yet,” Phil Flynn, energy analyst at Chicago’s Price Futures Group and an avowed oil bull, said in a commentary. 

“Lockdown fears may create more fear than reality,” added Flynn. “This week the US should see more oil draws and products should tighten. But we will have to wait for Tuesday before we can see this data. Before that, with light holiday volume, we might run on fear.”

The Netherlands put themselves in lockdown and many European countries were worried about Covid-19 restrictions.

U.S. health authorities urged Americans, however, to receive booster shots and wear masks during the holiday season. This was because the Omicron variant, which is raging across the globe, was expected to overtake the Omicron as the predominant strain in the United States.

Adding to the bearish sentiment was news that President Joe Biden’s signature $1.75-trillion “Build Back Better” infrastructure agenda was likely doomed by fellow Democrat Senator Joe Manchin’s last-minute refusal to vote for the plan. Manchin, one of 50 Democrat senators who make up the divided Senate with 50 Republicans. Goldman Sachs cut its U.S. growth projection due to the likely fall in government spending.   

Even positive news that oil output in Libya, one of the more important producers of OPEC, has fallen did not make much of an immediate impact in Monday’s trading session and may only lift sentiment slightly on Tuesday, when crude market participants await weekly industry data, said Samir Madani, a closely-followed market source. 

“Expect some brief relief tomorrow in the oil price after today’s drop due to the news about Libya, but bear in mind that the tables have turned,” Madani tweeted Monday afternoon in New York. This time the oil production outage is in GNA territory (and only onshore), which outputs less than the wells in LNA territory.”

GNA territory refers only to Libyan National Army-recognized Government of National Accord. LNA territory is for previously-ruling areas under Khalifa Haitar’s rule.

After oscillating between an session high of $69.53, and a low of $66.14, the benchmark U.S. crude oil settled at $68.23/barrel, down $3.63 or 3.7%. WTI lost 1.1% in the last week. The WTI reached a seven-year peak of $85.41 mid-October before plummeting.

After a session high at $72.44 and low of $69.29, London-traded was $1.90 lower, or 2.6%, at $71.62/barrel by 2:37 ET (19.37 GMT). Brent dropped 3.3% in the last week. Mid-October saw the global crude benchmark reach $86.70, which was a match for 2014’s highs before it fell.