Oil is on the back foot in the opening sessions

WTI and Brent futures prices slumped around 3% on Friday. Today, the price of a barrel of spot oil in the Asian open is bleeding and down some 0.4% in terms of US West Texas Intermediate (WTI) crude. It slid from the $75.80 level to a low of $74.79 before recovering back to the current $70.40 mark 

Japan said on the weekend it was considering releasing oil reserves to help dampen prices and adding to the mix, there are demand concerns growing as COVID-19 cases surge in Europe. Firstly, Japanese Prime Minister Fumio Kishida said he was ready to help counter soaring oil prices following a request from the United States to release oil from its emergency stockpile.

Additionally, news that Austria is entering into lockdown has sent energy prices tumbling as the resurgent mobility and travel driven demand expectations are at risk.

 TD Securities have noted, however, that Germany has ruled out a national general lockdown which eases some of the concerns. ''Broader and long-lasting lockdowns as a measure to encourage better vaccination rates in Europe will be a key demand risk to keep an eye out for this winter season, but the selloffs could ultimately prove to be overdone. Indeed, energy markets have recently shown a tendency to overestimate the impact of Covid related demand disruptions, with the Asian delta outbreak the latest example.''

''Still, we reiterate our view that global energy markets remain extremely vulnerable to a demand shock this winter, and the rise in natural gas prices could see expectations for demand from gas-to-oil-and-fuel-oil switching rise once again, particularly if winter is cold.''