Oil gains as investors see limited Omicron effect on demand

Oil barrel is pictured on the spot of the Canadian group Vermilion Energy in Parentis-en-Born, France, October 13, 2017. REUTERS / Regis Duvignau

TOKYO, December 13 (Reuters) – Oil prices extended the rise on Monday as investor appetite improved amid growing relief that the Omicron coronavirus variant may not cause serious illness and is likely to have a limited impact on global fuel demand.

Brent futures rose 72 cents, or 1.0%, to $ 75.87 a barrel by 0744 GMT, after rising 1% on Friday.

The US West Texas Intermediate (WTI) rose 85 cents, or 1.2%, to $ 72.52 a barrel, after a 1% increase in the previous session.

Both benchmark indices showed an increase of around 8% last week, their first weekly increase of seven. They have recovered more than half of the losses since the Omicron headlines first appeared on November 25.

“There was a growing sense of relief as the risk of serious illness at Omicron was seen as low,” said Tatsufumi Okoshi, senior economist at Nomura Securities.

“Market focus has shifted to the next action from OPEC +,” he said.

South African researchers see no sign that the Omicron variant is causing more serious illness, they said on Friday, when officials announced plans to roll out vaccine boosters with daily infections approaching a record high. read more

Covid-19 booster shots restore significant protection against mild illness caused by the Omicron variant, British health authorities said on Friday. read more

Investors are closely following the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC +, at their next meeting on 4 January. Earlier this month, they agreed to stick to their existing policy of monthly increases in oil production. read more

Iraq’s oil minister said on Sunday that he expects OPEC to maintain its current policy at its next meeting with gradual monthly increases in supply of 400,000 bpd.

The market reacted little to an announcement last Friday from the US Department of Energy that it will sell 18 million barrels of crude oil from its strategic petroleum reserve (SPR) on December 17, as part of an earlier plan to try to reduce gasoline prices. . read more

“WTI is likely to test the latest high of $ 73.34 and then try to rise to $ 78, the level before the Omicron fears led to strong sales at the end of last month,” said Toshitaka Tazawa, an analyst at Fujitomi Securities Co. Ltd.

Saudi Arabia, the world’s largest oil exporter, on Sunday forecast 2.9% GDP growth this year, followed by 7.4% growth in 2022, according to a budget document.

The Kingdom does not disclose the oil price it assumes to calculate its budget, but Monica Malik, chief economist at Abu Dhabi Commercial Bank, estimated that the budget for 2022 is probably based on an oil price assumption that can be as low as $ 50- $ 55. per fat. read more

Reporting by Yuka Obayashi; Edited by Stephen Coates and Sam Holmes

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