MOSCOW (MRC) -- Oil prices bounced in a light-volume session on Thursday on signs that the worst effects of the Omicron variant might be more containable than previously feared, even as countries imposed travel restrictions on surging infection levels, reported Reuters.
The oil market has wavered in recent days over how seriously to take the threat of another slump in fuel demand. The Omicron variant is more transmissible than previous coronavirus variants, but early data suggests it causes a milder level of illness.
Brent crude futures settled up USD1.56, or 2.1%, at USD76.85 a barrel, the highest close since Nov. 26, and a gain of 4.5% on the week.
US West Texas Intermediate (WTI) crude futures ended up USD1.03, or 1.4%, at USD73.79 a barrel, to rise 4.1% on the week. Volume was light on Thursday, with just 244,000 front-month contracts trading, according to Refinitiv Eikon data, compared with a daily average of 381,000 contracts over the last 200 days.
"The demand destruction everybody thought was going to happen isn’t going to happen," said Phil Flynn, senior analyst at Price Futures Group in Chicago.
However, some governments are imposing tighter travel restrictions to slow the spread of the variant, which could hit demand even if Omicron causes a lower level of hospitalization, particularly among the vaccinated.
The Chinese city of Xian on Wednesday ordered its 13 million residents to stay home, while Scotland imposed gathering limits from Dec. 26 for up to three weeks, and two Australian states reimposed mask mandates.
The United States authorized separate antiviral COVID-19 pills manufactured by both Pfizer and Merck, and officials from the US Food and Drug Administration said the medications are both effective against the Omicron variant.
AstraZeneca said a three-dose course of its COVID-19 vaccine was effective against Omicron, citing data from an Oxford University lab study.
Operating US oil and gas rigs rose to their highest levels since April 2020 in the most recent week, according to energy services firm Baker Hughes. Overall counts are now at 586, portending a boost in output in coming months.
As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.
We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.
We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, EIA said in a monthly report earlier this year, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC