Oil prices near $75 per barrel, boosted by easing concerns over Omicron

oil prices

Oil prices rose this Friday and headed on to their biggest weekly gain since late August, as the market is easing its concerns over Omicron, the new Covid-19 variant.

Firstly, both Brent and the US mix, the West Texas Intermediate crudes were on course for gains of about 8% this week, their first weekly gain in seven. Brent was up 42 cents, 0,6%, and settled at $74,85 per barrel.

On the other hand, the WTI rose 43 cents, 0,6% to $71.37; after sliding 2% in a volatile session the previous day. Phil Flynn, senior analyst price futures group in Chicago, said about the matter. “Oil traders are coming out of their shell-shock and feeling more bullish as they recalibrate their demand expectations in the aftermath of the Omicron variation of the coronavirus.”

Moreover, earlier in the week, the oil market recovered about half the losses suffered since the Omicron outbreak on Nov. 25. Thereafter prices went up after suggestions that three doses of Pfizer’s vaccine would shield against the Omicron variant.

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Oil prices may keep rising

Commerzbank analyst Carsten Fritsch, said about the matter. “The oil market has thus rightly priced out the ‘worst-case scenario’ again, but it would be well advised to leave a certain residual risk to oil demand in place.”

On the other hand, as Reuters reports, faltering domestic air traffic in China is creating a hurdle for oil prices to go higher. It is creating tighter travel restrictions and weaker consumer confidence after repeated small outbreaks.

At the same time, rating agency Fitch downgraded property developers China Evergrande Group and Kaisa Group, saying they had defaulted on offshore bonds. Consequently, fears rose over a potential slowdown in China’s property sector, as well as the broader economy of China.

Finally, these factors might keep their grip on prices, holding them from growing further. Nevertheless, government data shows that U.S. consumer prices rose significantly in November to produce the largest year-on-year rise since 1982. This adds to the market’s bullish sentiment about oil demand.

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