Brent crude continues rebounding from recent monthly lows, topping $76/b on Thursday while the price of the U.S-based WTI oil contract is recovering above $72/b as energy traders are confident that the spread of the new Omicron covid variant would not harm the global economic growth and slow down the surging demand for petroleum products after the pandemic.
Hence, the appetite for the growth-sensitive crude oil contracts increased yesterday after the vaccine-makers Pfizer and BioNTech said that a three-shot course of their Covid-19 vaccine may protect against infection from the Omicron variant.
V-shaped price recovery:
Both crude oil contracts extend gains for a fourth straight day on Thursday, recovering almost most of the damage that occurred after the announcement of the new Omicron variant from WHO last week.
WTI and Brent fell to as low as $62/b and $66/b respectively on Dec.02 based on the worries that the new highly mutated Omicron variant might reduce global economic growth and trigger a new wave of fuel demand destruction just as OPEC+ supply increases.
Brent crude, Daily chart
Many countries have already introduced travel restrictions to and from countries in Southern Africa, while some others have resumed full or partial lockdowns including Austria, Germany, and Denmark to stop the spread of the virus, reducing the demand and the consumption of jet fuels and gasoline.
However, the early indications that the Omicron variant is not so severe as initially feared since the hospitalizations have not increased, triggered a buying wave for economically sensitive assets including the crude oil, allowing the contracts to recover from last week’s fierce sell-off.
Finally, oil prices continue recovering even though OPEC+ decided to increase production by 400k bpd for the month January 2022, despite the Omicron-driven uncertainty.
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