LONDON- Oil fell on Monday as new concerns about the Omicron coronavirus variant and doubts around the effectiveness of vaccines against it were weighing on prices.
Brent fell 78 cents, or 1%, to $74.37 a barrel by 1227 GMT, and U.S. West Texas Intermediate (WTI) was down 72 cents, or 1%, at $70.95 a barrel.
Both benchmarks posted gains of about 8% last week, their first weekly gain in seven.
"The major oil contracts registered decent weekly gains, but it is noticeable that current prices are still way below the pre-Omicron levels," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.
The Omicron coronavirus variant, reported in more than 60 countries, poses a "very high" global risk, with some evidence that it evades vaccine protection, the World Health Organization says.
Oxford University also said vaccines showed to induce lower levels of protection against Omicron.
OPEC on Monday raised its world oil demand forecast for the first quarter of 2022, but left its full-year growth prediction steady, saying the Omicron coronavirus variant would have a mild impact as the world gets used to dealing with the pandemic.
Producers from the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, will meet on Jan. 4 to decide on their output policy.
Iraq's oil minister said on Sunday he expected OPEC at its next meeting to maintain its current policy of gradual monthly increases in supply by 400,000 bpd.
The market reacted little to an announcement last Friday by the U.S. Department of Energy that it will sell 18 million barrels of crude oil from its strategic petroleum reserve (SPR) on Dec. 17, as part of a previous plan to try to reduce gasoline prices.
"The oil market risks facing a sizeable oversupply in the first quarter of 2022... We therefore envisage potential setbacks for the oil price in the coming weeks," said Commerzbank analyst Carsten Fritsch.
Traders will also focus this week on monetary policy decisions expected to be taken by the European Central Bank (ECB), the U.S. Federal Reserve, the Bank of England, and the Bank of Japan that could potentially include an early end to stimulus packages.
(Reporting by Bozorgmehr Sharafedin in London; additional reporting by Yuka Obayashi in Tokyo; editing by Stephen Coates, Sam Holmes and Louise Heavens) ((firstname.lastname@example.org; Twitter: @bozorgmehr;))