Oil fell on Monday as new doubts emerged about the effectiveness of vaccines against Omicron coronavirus variant, though OPEC predicted in its monthly report that the variant's impact on fuel demand will be mild.
Brent crude fell 76 cents, or 1%, to settle at $74.39 per barrel. U.S. West Texas Intermediate (WTI) crude declined 38 cents, or 0.53%, to settle at $71.29 per 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 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 that vaccines have been shown to induce lower levels of protection against Omicron.
The Organization of the Petroleum Exporting Countries (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 variant would have a mild impact as the world gets used to dealing with the pandemic.
OPEC and its allies, a group known as OPEC+, will meet on Jan. 4 to decide on their output policy.
Iraq's oil minister on Sunday said that he expected OPEC at its next meeting to maintain its current policy of gradual monthly increases in supply by 400,000 bpd.
There was little market reaction 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 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, potentially including early halts to stimulus packages.