The progress of the coronavirus may worsen the oil outlook, and oil prices recorded their biggest weekly decline in more than a year

U.
S.
oil fell 9.
83% this week, the biggest weekly drop in more than a year, hitting a low of $67.
40 / barrel to close at $68.
24 / barrel, on Friday the panic caused by the new variant of the new coronavirus, global stock markets fell, oil prices plunged sharply, cloth oil fell 8.
72% this week, the lowest hit $70.
99 / barrel, closed at $71.
80 / barrel
.

The discovery of the new variant in South Africa has prompted the United States, the European Union and the United Kingdom to restrict air travel from the region, triggering a sell-off across financial markets and heightening concerns that
the oversupply in the crude oil market may widen in the first quarter.

The United States releases strategic crude oil reserves

U.
S.
President Joe Biden's decision to tap into the nation's emergency oil reserves marks the first time in two decades that a president has used reserves to depress energy prices rather than to address supply
disruptions.

It also marks the first time that the United States has joined forces with oil-consuming countries to release oil reserves
under the auspices of the International Energy Agency (IEA), a Western energy watchdog.

Biden announced on Tuesday (Nov.
23) that the United States will release 50 million barrels of crude oil from the Strategic Petroleum Reserve, coordinating with India, South Korea, Japan and the United Kingdom to release oil reserves in an attempt to curb oil prices
, which have reached seven-year highs.

Tristan Abbey, president of consulting firm Comarus Analytics, said he worked in energy at the White House during the Trump administration
.
The danger is that future governments will use this so-called managed release as a precedent
for future release of reserves to control oil prices.

Biden's decision adds new risks
to oil traders and the drilling industry seeking to track market-related government policy decisions.
The drilling industry may see this as a signal that consumer governments are pricing around $80 a barrel as the upper limit
of the market.

This will limit the potential profits of future oil investment and therefore may affect energy investment
.

Benjamin Salisbury, an energy policy analyst at Height Capital Markets, said the consequences may be imperceptible but pervasive, and it will change the way energy companies think about future uncertainty and investment in new projects, whether drilling, oilfield services or pipeline projects, which will leave the possibility
for new risks to arise.

Before Biden's announcement of the release of oil reserves, OPEC+ producers have repeatedly ignored calls from the US and other consuming governments to increase crude oil production, while next year's US congressional elections are approaching, and Biden is looking for ways to curb rising inflation
.

The Strategic Petroleum Reserve is often used to provide sufficient supply after an outage, such as when a hurricane destroys pipelines or oil fields, or when a war suddenly shuts down
production in a conventional supplier country.
There is currently no such disruption
.

While Biden's decision to use reserves to drive down oil prices is unusual, it is not without precedent
.
When then-U.
S.
President Bill Clinton released 30 million barrels from the Strategic Petroleum Reserve in 2000 to help reduce high household heating costs after winter, there was no real supply disruption
.

With the progress of the new variant of the new coronavirus, the outlook for the oil market may deteriorate

OPEC+ is monitoring progress on the new variant of the coronavirus, with some fearing that it could worsen
the outlook for the oil market with less than a week to go before the policy-making session, the sources said.

A source said that as a major member of OPEC+, Russia is not yet worried about virus variants
.
OPEC+ has consistently rejected U.
S.
calls for more to lower oil prices, continuing its 400,000 barrels per day since August and slowly lifting last year's record production restrictions
.

Global authorities have expressed alarm at news of a new variant of the coronavirus, Omicron (B.
1.
1.
529), with the European Union, the United Kingdom and India all announcing tighter border controls
.

One OPEC representative said it wasn't good because it added bearish sentiment to the weak outlook, while another thought that might be the case, though it was too early
to say.

A source familiar with Russian thinking on Friday downplayed the virus variant
.
The source said: "I think the market panic caused by the new coronavirus should be quelled
.

South African health officials announced at a press conference on Thursday that South African scientists had detected a new variant of the coronavirus, which poses a "significant threat"
to curbing the spread of the new coronavirus.
South African Minister of Health Joe

Phahla said the new coronavirus variant, known as B.
1.
1.
529, "has contributed to a surge in coronavirus cases in South Africa" and that authorities are maintaining serious concerns
about this strain.

OPEC meets next week to decide whether to increase production plans

OPEC+ will meet on December 2 to decide on production policy
.
Another source said the alliance would assess the importance of
the variant's impact on the market.

OPEC and its allies are increasingly inclined to abandon plans
to increase output at next week's meeting.
The Saudi-led, 23-nation coalition was inclined to abandon plans
to modestly increase production in January at the Dec.
1-2 meeting, panelists who spoke on condition of anonymity.
The group is already considering a moratorium on production
increases after the United States and other oil-consuming countries announced on Monday the release of emergency oil reserves.

An OPEC source said that according to the findings of a panel of experts advising OPEC ministers, the release of the U.
S.
-led strategic oil reserve could increase supply
in the coming months.
These forecasts cast a shadow over the outlook for the Dec.
2 meeting, when OPEC will discuss whether to adjust its plan to
increase production by 400,000 barrels per day in January and beyond.

Bob McNally, president of consultancy Rapidan Energy Group and a former White House official, said the emergence of new variants could lead to new lockdowns and travel restrictions, precisely changes in market conditions that could deviate ministers from their original plans
.

An OPEC group that advises ministers met this week and they believe the release of U.
S.
-led oil inventories will add to the oversupply situation
next year, the sources previously said.
OPEC has warned
of an oversupply next year.

Andrew Lipow, president of Lipow Oil Associates, said: "Given the US holiday season and light trading, I think the market is digesting the release of reserves announced by major consumers and wondering how OPEC+ will react
.
" ”

Three OPEC+ sources told Reuters that OPEC+ is not currently discussing suspending production
increases despite the decision of the United States and other countries to release crude oil reserves.

OPEC members, the United Arab Emirates and Kuwait said they fully cooperated with the OPEC+ agreement and had no predetermined position
ahead of next week's meeting.

The DOE said it has begun auctioning a total of 32 million barrels of crude oil released from four Strategic Petroleum Reserve (SPR) reservoirs, which will be delivered
between the end of December and April 2022.
The DOE will also announce the sale of up to 18 million barrels of SPR crude as early as
Dec.
17.

Iraq's oil minister said the future of the oil market remains uncertain and that the Organization of the Petroleum Exporting Countries (OPEC) has been quite successful
in its cautious approach to output and supply reductions.
OPEC does not want to lose such success, as the oil market remains fragile and any additional supply could lead to a price crash or oversupply
.

Market outlook: Market news and economic data for next week

Next week's economic data will welcome Germany's November CPI y/y, China's official manufacturing PMI for November, Eurozone CPI y/y for November, US ADP employment for November, Eurozone unemployment rate for October and US unemployment
rate for November.

In terms of market news, South Africa's health department recently announced that the country has found a new variant of the new coronavirus, which carries more genetic mutations
.
Bank of Japan Governor Haruhiko Kuroda's speech, Fed Governor Bowman's speech on the central bank and the US economy, OPEC+ oil producer ministerial meeting, 2021 FOMC voting committee, Atlanta Fed President Bostic speech are all worth paying attention to
.