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Oil prices slumped on Monday as surging cases of the Omicron coronavirus variant in Europe and the United States stoked investor worries that new restrictions to combat its spread could dent fuel demand.

Brent crude futures fell $2, or 2.7 per cent, to settle at $71.52 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell $2.63, or 3.7 per cent, to settle at $68.23 a barrel.

Brent fell to a session low of $69.28 per barrel, while WTI sank to $66.04 per barrel, both their lowest levels since early December.

“This is a knee-jerk reaction to the proliferation of the virus and the fear that lockdowns can rapidly spread,” said Andrew Lipow of Lipow Oil Associates in Houston.

The Netherlands went into lockdown on Sunday and the possibility of more COVID-19 restrictions being imposed ahead of the Christmas and New Year holidays loomed over several European countries.

U.S. health officials urged Americans on Sunday to get COVID-19 booster shots, wear masks and be careful if they travel over the winter holidays, with the Omicron variant raging across the world and set to take over as the dominant strain in the United States.

Oil prices fell despite Moderna Inc’s announcement on Monday that a booster dose of its COVID-19 vaccine appeared to be protective against Omicron in laboratory testing.

Meanwhile, OPEC+ compliance with oil production cuts stood at 117 per cent in November, up 1 percentage point from the previous month, two sources from the group told Reuters, as output continues to lag agreed targets.

In the United States, energy companies added oil and natural gas rigs for a second week in a row.

The oil and gas rig count, an early indicator of future output, rose by three to 579 in the week to Dec. 17, representing its highest number since April 2020, energy services business Baker Hughes Co said in its closely followed report on Friday.

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