Oil prices rally over 2% to start week as omicron fears ease

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Crude oil prices were trading sharply higher on Monday, as concerns around the Omicron version of the coronavirus COVID-19 eased slightly, and other factors helped deflect some attention from the pandemic.

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Analysts at Zaner wrote in remarks Monday that energy prices “have gotten away with the nonsense that the Omicron virus may not present serious health problems”.

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Recent reports have given some reason for optimism about the potential impact of the new stress on the economy. Anthony Fauci, America’s top medical adviser, said that Omicron did not generate “a great deal of severity” in cases, aligning with some early research that indicates infections tend to be milder than other types.

Meanwhile, Saudi Arabia raised the prices of Arab Light oil over the weekend for January delivery, which it sells to Asia and the Americas, to a two-year high, according to Reuters,

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The decision by the Saudis, de facto head of the Organization of the Petroleum Exporting Countries and one of the world’s largest oil producers, to hike oil costs in the Americas and Asia “comes amid hopes that demand will remain high in the new year,” says ActiveTrades. Senior analyst Ricardo Evangelista wrote in a daily research note.

that, together deadlock report Supporting the barrel price in talks between the US and Iran.

Against that background, for West Texas Intermediate crude January delivery CLF22,
+2.55%

CL00,
+2.58%
The US benchmark was trading $1.63, or 2.5%, at $67.89 a barrel on the New York Mercantile Exchange after a weekly loss of 2.8% on Friday.

February Brent crude BRNG22,
+2.49%

BRN00,
+2.46%,
The global benchmark was up $1.72, or 2.5%, on ICE Futures Europe to reach $71.60 a barrel, after a 2.4% weekly decline on the following month’s contract basis.

Both WTI and Brent have posted six consecutive weekly declines, the longest such streak since 2018.

“Monday’s action comes on the back of last week’s decision by the OPEC+ cartel to maintain production growth for January, despite uncertainty over demand due to the emergence of the Omicron variant,” Evangelista said.

Oil prices have seen some stabilization as OPEC and its allies, a grouping known as OPEC+, last Thursday displayed some confidence in crude oil prospects, to rollover an existing production policy. agrees and increases monthly production to 400,000 barrels per day in January. , deciding not to postpone an important meeting to allow for further changes to the policy, if necessary.

While leaving meeting ‘in session’, OPEC+ behaves abnormally while maintaining current production policy

“However, today’s gains should not be interpreted as the start of a rally in prices, as uncertainty over the impact of the new virus variant on economic activity will reduce the scope for further growth,” Evangelista said.

Petroleum product prices also rose on Nymex, with January gasoline RBF22,
+1.96%
1.5% to $1.981 per gallon and adding January heating oil HOF22,
+1.74%
1.2% to $2.125 per gallon.

However, natural-gas futures remain “extremely volatile and weather-driven,” said Colin Czynski, chief market strategist at SIA Wealth Management.

Heating fuel prices recorded a weekly loss of nearly 25% on Friday. On Monday, January Natural Gas NGF22,
-11.13%
British thermal units per million declined 10.5% to $3.701.

“The main driver for these heavy losses has been the mild weather outlook for December, with NOAA forecasts showing a high probability of warmer-than-normal temperatures across the U.S. except the West Coast,” said commodity analyst Kristin Redmond. Schneider Electric, Monday note. NOAA released an updated three- to four-week outlook on Friday, which “shows a similar situation,” she said.

“There is likely to be lower heating demand for natural gas markets throughout this month, which will leave more gas in storage,” Redmond said.

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