Oil prices continue their rally as investors heaved a sigh of relief in the face of mild Omicron symptoms that may not have a significant impact on global fuel demand.
Brent Crude Oil futures gained 1%, to $75.87 a barrel and West Texas Intermediate (WTI) rose 1.2%, to $72.52 a barrel continuing their 1% price increase from Friday.
Both benchmarks gained 8% last week and recovered more than half from the losses suffered since Omicron headlines first appeared on November 25.
"There was a growing sense of relief as the risk of serious illness in the Omicron was seen as low," said economist at Nomura Securities, Tatsufumi Okoshi. (Reuters, 2021)
"Market focus has shifted to the next action by OPEC+," he added. (Reuters, 2021)
Scientists from South Africa say that there is no sign of the Omicron variant causing more severe illness, but the officials decided to roll out vaccine boosters as the daily infection number approaches record level.
According to UK health authorities, vaccine booster shots can significantly protect against the Omicron variant.
Investors are keeping a close eye on the Organization of the Petroleum Exporting Countries and its allies, an organization known as OPEC+, as the next meeting is scheduled for 4 January. Earlier this month, the group agreed to stick to their current policy of increasing oil production every month.
Iraq’s oil minister believes OPEC stays at its current policy of gradually increasing supplies by 400,000 bpd per month at its next meeting.
The announcement of the U.S. Department of Energy made on Friday to sell 18 million barrels of crude oil from the Strategic Petroleum Reserve (SPR) did not cause market to react significantly.
"WTI will probably test its recent high of $73.34 and then try to rise towards $78, the level before the Omicron fears led to a sharp sell-off late last month," said Fujitomi Securities Co Ltd analyst, Toshitaka Tazawa. (Reuters, 2021)
Saudi Arabia, a country that it’s the largest oil exporter in the world, projected GDP growth of 2.9% this year, followed by 7.4% in 2022.
The oil price that was used to calculate the budget has not been disclosed but the chief economist at Abu Dhabi Commercial Bank, Monica Malik says that the price for one barrel for 2022 budget was likely based on an oil price assumption of $50-$55.
*Obayashi, Yuka (13. December 2021). Reuters: Oil gains as investors see limited Omicron impact on demand. Last viewed on 13.12.2021 on https://www.reuters.com/markets/commodities/oil-rises-optimism-omicron-impact-will-be-limited-fuel-demand-2021-12-13/
