Oil Prices Edge Higher as Omicron Concerns Reduce

Oil Prices Edge Higher as Omicron Concerns Reduce

Oil prices continue their recovery, reversing roughly half of the slump they suffered in late November and early December, as the most serious concerns about the new coronavirus variant have evaporated, for now, Commerzbank said in a Tuesday note.

Brent crude has risen to $74 per barrel Tuesday morning and West Texas Intermediate is trading above $70 levels again, the bank noted. The variant appears to be milder than the previously dominant Alpha variant despite a significant rise in new cases in South Africa, Commerzbank said.

If Omicron’s mild symptoms are confirmed, the impact on oil demand is expected to be far less severe than suggested by the dramatic price collapse, according to Commerzbank.

The decision by the Organization of Petroleum Exporting Countries and its allies, or OPEC+, to stick with its January output hike signalled optimism about demand and appears to have been justified, the bank said. Saudi Arabia’s raising of its official selling prices corroborated this, Commerzbank noted.

Nuclear talks with Iran last week highlighted significant differences between the negotiation partners, lending support to prices, according to the bank.

Any agreement seems hardly realistic and US sanctions are seen to remain in place for some time, making additional oil from Iran unlikely to reach the market anytime soon, Commerzbank said.

China also published data for crude oil and gas imports in November, with crude oil imports rising to 10.17 million barrels per day but remaining nearly 1 million b/d short of the year-on-year level, the bank said. Natural gas imports jumped 17% to 10.73 million tons, their highest level since January, Commerzbank said.

The increase in gas imports was attributed to higher piped gas supplies from Russia. However, LNG deliveries declined to their lowest level since February, the bank said, citing figures from Refinitiv Eikon. The steep rise in prices seems to have dampened LNG deliveries, according to Commerzbank. # Oil Prices Edge Higher as Omicron Concerns Reduce

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