LONDON:Oil prices rose on Monday but remained under pressure from rising COVID-19 cases in Europe and a potential release of Japanese oil reserves, raising concerns about both oversupply and weak demand.

Prices of the Brent and U.S. West Texas Intermediate (WTI) crude benchmarks fell more than $1 in early trading, hitting their lowest since Oct. 1.

By 1007 GMT, Brent was up 31 cents, or 0.4%, at $79.20 a barrel while U.S. crude had gained 34 cents, or 0.5%, to $76.28.

The prospect of national lockdowns in Europe has raised concerns about economic and oil demand growth, said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.

Investors sought safe havens such as the dollar early in the session, contributing to the sharp decline in oil prices, Varga added.

Tens of thousands of people, many of them far-right supporters, protested in Vienna on Saturday after the Austrian government announced a new lockdown. Germany could also impose fresh curbs, with politicians debating a lockdown for unvaccinated people.

The U.S. dollar traded close to a 16-month high against the euro on Monday, making dollar-priced crude more expensive for buyers with other currencies.

Meanwhile the prospect of the release of oil from strategic petroleum reserves (SPR) maintained the price pressure on oil and kept Brent under the psychologically important $80 mark.

Japanese Prime Minister Fumio Kishida signalled on Saturday that he was ready to help with efforts to combat soaring oil prices after a request from the United States to release oil from its emergency stockpile.

“Gasoline prices are nearly $4 a gallon and that’s when politicians in the U.S. get very nervous,” said Fereidun Fesharaki, chairman of consultancy Facts Global Energy.

But any SPR release is going to have only a brief impact for two or three weeks before everything goes back to where it was, he added.

The combined SPR release could be 100 million to 120 million barrels or even higher, Citi analysts said in a note dated Nov. 19. This includes 45 million to 60 million barrels from the United States, about 30 million barrels from China, 5 million barrels from India and 10 million barrels each from Japan and South Korea, the bank estimated.

Investors were also watching developments in the Middle East after Saudi state media reported on Monday that the Saudi-led coalition fighting the Iran-backed Houthi movement in Yemen had said it detected indications of an imminent danger to navigation and global trade south of the Red Sea.