Oil prices keep climbing even as Omicron Covid-19 variant fans out

Summary

  • Two antiviral tablets for COVID-19 have been licensed in the United States
  • Exxon will alter output at the Baytown refinery after a fire
  • The number of rigs in the United States has reached new highs since early 2020.

Even as governments issued travel restrictions due to rising infection levels, oil prices recovered in a light-volume session on Thursday on evidence that the worst consequences of the Omicron type may be more manageable than earlier thought.

Oil prices keep climbing even as Omicron Covid-19 variant fans out

In recent days, the oil market has been split on how seriously to take the potential of another drop in gasoline demand. Although the Omicron variation is more transmissible than prior coronavirus variants, preliminary evidence shows that it causes less disease. Brent oil futures rose $1.56, or 2.1 percent, to $76.85 a barrel, the best closing since November 26 and a 4.5 percent week-to-week increase. Which is bad for business.

WTI oil futures in the United States closed the week up to $1.03, or 1.4 percent, at $73.79 a barrel, up 4.1 percent on the week. According to Refinitiv Eikon data, just 244,000 front-month futures traded on Thursday, compared to a daily average of 381,000 contracts during the previous 200 days.

“The demand destruction that everyone expected isn’t going to materialize,” said Phil Flynn, a senior analyst at Chicago-based Price Futures Group. However, in order to curb the spread of the variation, some countries are implementing more travel restrictions, which might reduce demand even if Omicron results in fewer hospitalizations, especially among the vaccinated.

On Wednesday, the Chinese city of Xian ordered its 13 million inhabitants to remain from home, while Scotland imposed gathering restrictions for up to three weeks beginning December 26 and two Australian states redisposed mask requirements.

Separate antiviral COVID-19 tablets developed by Pfizer and Merck were approved in the United States, and authorities from the US Food and Drug Administration claimed the treatments are both effective against the Omicron variety. According to findings from an Oxford University lab research, a three-dose course of AstraZeneca’s COVID-19 vaccination proved effective against Omicron.

According to Baker Hughes, the number of operating oil and gas rigs in the United States reached its highest level since April 2020 last week. Overall numbers have risen to 586, indicating an increase in production in the coming months. A fire at Exxon Mobil’s Baytown refinery, one of the biggest in the United States, wounded four workers. The fire has been out, and the refinery is optimizing operations at the plant, which can handle up to 560,000 barrels per day.

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