Oil Recovers as Omicron Threat Eases, Japan to Ban Foreigners
Oil has rallied early in the first session of the week due to reports that the omicron variant of the coronavirus causes symptoms that are mild, and financial markets are not waiting to find out if this is correct, OANDA analyst Jeffrey Halley said in a Monday note.
Prices of crude oil had plunged by some $10 on a barrel Friday after a new variant of COVID-19 was discovered with countries planning another lockdown.
However, the omicron whipsaw is on full display today, with Brent crude jumping 4.78% to $76.35 per barrel and West Texas Intermediate rallying 5.45% to $71.85 per barrel, Halley said.
“Oil will be the market where short volatility traders go to die this week,” the analyst said.
The picture for oil is further muddied by the upcoming OPEC+ meeting, the analyst noted. The group’s compliance has been consistently above 100%, suggesting that there is not much swing production to further boost production, Halley said.
US production had recovered to 11.5 million barrels per day before the omicron announcement, but prices were still high, suggesting that OPEC+ would have been comfortable raising production targets as planned, according to Halley.
Given rising US production, releases of strategic oil reserves and a potential roadblock to global recovery in the form of the omicron variant, OPEC+ now has all the excuses it needs to pause production increases and await further clarity on the virus, Halley noted.
Meanwhile, negotiations with Iran have restarted in Vienna over the country’s nuclear program, and the prospect of increased Iranian crude on international markets is another volatility point, Halley said.
Japan to ban foreign arrivals due to Omicron variant
Japan on Monday said it would ban all new foreign arrivals from Tuesday, Kyodo news agency reported. The Japanese government had earlier said it was considering reviving a blanket ban on foreign arrivals due to concerns regarding the new Omicron variant of the coronavirus.
Japan’s border restrictions were eased in early November, allowing students, business people and technical interns into the country as long as their sponsors took on the responsibility to monitor their movements in the country, Kyodo reported.
Tokyo has already suspended entry for foreigners who have recently been in Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia, South Africa, Zambia or Zimbabwe.
Residents and citizens returning from any of the nine countries are required to spend 10 days in a government-designated facility upon their arrival.
The new B.1.1.529 variant was first reported to the World Health Organisation (WHO) from South Africa on Wednesday. The Geneva-based organisation categorised it as a “Variant of Concern” two days later.
Fears are growing that the new variant could be more transmissible or that it could reduce the effectiveness of existing vaccines, although much remains unclear. A growing number of countries are responding with bans on travel from southern Africa.
The WHO has called for restraint when it comes to travel restrictions. #Oil Recovers as Omicron Threat Eases, Japan to Ban Foreigners. Read Also: Oil Hits Multi-Year Highs Amidst China Energy Crunch
