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Oil jumps back towards $72 as Omicron panic brushes off the market

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Oil prices jumped back towards $72 per barrel this Monday, as the initial panic caused by the Omicron variant of the Covid-19 is now brushing off the market. Reports by health authorities worldwide have reported that the variant causes mild symptoms.

Firstly, Brent gained $1,35, 1,9% to settle at $71,23 this Monday; while the US mix, the West Texas Intermediate advanced $1,43, 2,2% to settle at $67,69. Both contracts fell for six straight weeks last week.

The increase in prices comes as the Omicron variant proves to cause mild symptoms. Consequently, it does not pose a significant danger for economies worldwide. Reports in South Africa say that Omicron there is not causing great danger. Also, the US infectious disease official, Anthony Fauci, told CNN, “It does not look like there’s a great degree of severity” so far.

In addition, Jeffrey Halley, an analyst at brokerage OANDA, said about the matter. “If Omicron is proven over the coming days or weeks to be less aggressive, even if it is more contagious, then we can say 100% last week’s lows were the bargain of the quarter.”

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High oil prices are pretty much warranted

Furthermore, Louise Dickson of Rystad Energy commented. “Traders are brushing off the initial panic over the Omicron variant. The oil market seems to now be convinced that higher price levels are warranted.”

As reported previously, oil prices jumped almost $40% this year. This year, particularly Brent, increased 38%, supported by output curbs by OPEC. However, it has fallen from its all-time-high $86 per barrel from October.

On the other hand, OPEC, the Organization of Petroleum Exporting Countries, announced last week it would continue with its monthly output increases of 400,000 barrels per day. Despite the Omicron danger and the US pressuring it to increase more, OPEC decided to keep with this increase rate.

Finally, on Sunday, Saudi Arabia raised January’s official selling prices for all crude grades sold to Asia and the United States by up to 80 cents from the previous month.

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