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Oil Shares Drop as New Virus Strain Stokes Fears of Recovery Hobbling

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By Dhirendra Tripathi

Investing.com – Shares of energy companies traded sharply lower Friday as oil crashed more than 10% amid fears that a new strain of the coronavirus could halt the still-fragile recovery in global economies.

Both upstream and downstream companies were caught in the broad market selloff.

Occidental Petroleum (NYSE:OXY) was amongst the biggest losers, shedding over 10%, with Devon Energy (NYSE:DVN) losing just short of that mark. Diamondback Energy (NASDAQ:FANG) was down 8.3%, while Marathon Petroleum (NYSE:MPC), ConocoPhillips (NYSE:COP), Phillips 66 (NYSE:PSX) and Valero (NYSE:VLO) fell around 6% each.

ADRs of BP (NYSE:BP) and Shell (NYSE:RDSa) were down 7.6% and 5.6%, respectively. Exxon Mobil (NYSE:XOM) traded 5% lower.

Both WTI Crude Oil WTI Futures and Brent Brent Oil Futures tumbled as fears of lockdowns returning and hurting oil demand if the economic environment becomes adverse gripped the market. The plunge comes ahead of a key OPEC+ meeting next week.

Bloomberg quoted UBS as saying that the oil cartel could choose to pause its current planned output hike of 400,000 barrels a day or even cut output. The group will have to consider internal projections, published before the news of the variant broke, that showed an expected surplus early next year, UBS said.

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