Oil set its biggest weekly gain in more than three months as the worst fears over the Omicron strain of SARS-CoV-2 have receded.
West Texas Intermediate (WTI) futures climbed 8.2 percent this week.
Fuel consumption so far has escaped any major blows from the Omicron variant. Yet confidence is limited. Rallies are still punctuated by sell-offs such as that on Thursday after rising infection rates prompted some governments to tighten travel restrictions.
“Crude prices are having a good week as Omicron jitters have eased and as the 2022 growth outlook for the US economy remains mostly undeterred,” Oanda Corp senior market analyst Ed Moya said.
Oil has seen a remarkable turnaround after tumbling into a bear market on Tuesday last week, following a multiweek plunge.
WTI crude for January delivery rose US$0.73 to US$71.67 a barrel on Friday, up 8.2 percent weekly.
Brent crude for February delivery on Friday rose US$0.73 to US$75.15 per barrel, rising 7.5 percent weekly.
Concerns persist over the Omicron variant, which one study indicates is 4.2 times more transmissible than the Delta strain in its early stages.
Some signs of weakness are emerging. Traders are facing the prospect of a weakening physical market for crude in Asia, despite Saudi Arabia’s move to increase oil prices for next month.
The prompt timespread for global benchmark Brent has also narrowed this week, pointing bearish sentiments.
Many parts of the eastern US, including New Jersey and Connecticut, are seeing a rise in hospitalizations. The City of London might be on the verge of becoming a ghost town again after firms started telling thousands of staff to work from home in response to the latest UK government guidance.
In the US, consumer prices rose last month at the fastest annual pace in nearly 40 years, magnifying persistent inflation and with consumers facing the biggest jump in energy bills in more than a decade. The inflation headline numbers continue to add pressure for the US Federal Reserve to tighten monetary policy.
In related news, the first oil from US President Joe Biden’s release from the country’s emergency crude reserves is being granted to Exxon Mobil Corp.
The company is to receive 4.8 million barrels of oil from the US’ Strategic Petroleum Reserve as part of an exchange, the US Department of Energy said Friday on its Web site.
The release is part of the Biden administration’s effort to lower energy costs and tackle surging gasoline prices, which touched a seven-year high last month.
Additional reporting by AP
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