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Oil Recovers Some Omicron-Triggered Loss as Risk Unclear  -Breaking


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By Barani Krishnan

Investing.com – Oil markets recovered some of last week’s stunning loss triggered by panic over the Omicron variant of Covid after some said that the strain might be milder than thought, despite the World Health Organization reporting that it carried a very high risk of infection.

Crude prices were up about 4% in late-afternoon New York trade after Friday’s dump of about 12%, which was the biggest one-day percentage loss in oil since April 2020.

“We know that the cart was out in front of the horse but we must respect the fact that the charts saw some technical damage,” Phil Flynn, energy analyst at brokers Price Futures Group in Chicago, said, referring to Friday’s action in crude precipitated by the first news headlines on Omicron.

But as bad as that selloff was, “the price of oil is still substantially above where it was a year ago”, Flynn noted.

WTI or U.S. crude oil benchmark, closed at $69.95 per bar, up 1.80 or 2.6%.

The London-traded Crude, which is the international benchmark for oil, rose $1.36 or 1.8% to $72.95 at 2:35PM ET (19:35 GMT)

Omicron’s variant was considered very dangerous by the WHO. It could lead to infection surges in more countries, causing economic decline after two years of the Omicron pandemic. Experts believe the Omicron variant may be less severe than originally thought.

The big airlines took swift action to defend their hubs, restricting travel from South Africa. They feared that the new variant might spread and cause restrictions in other areas.

OPEC (Organisation of the Petroleum Exporting Countries) also took no risks. 

The oil producing cartel delayed by two days the  technical meetings of its OPEC+ alliance, before Thursday’s all-important ministerial meeting led by Saudi Energy Minister Abdulaziz bin Salman and his Russian peer Alexander Novak.

The postponement was to study the potential impact of the Omicron strain on the market, OPEC had initially said, although both Abdulaziz and Novak later said they did not think any adjustments were necessary as yet to the oil producing cartel’s targets.

Jan Psaki, White House Press Secretary, stated that more oil relief was needed and said there wasn’t need to be any further releases of U.S. crude. In an effort to lower oil prices, the United States and major oil-consuming nations announced last week that they had coordinated the release of 55 million barrels crude oil.

The prospects of talks between Iran, world powers and the United States were not affecting crude oil prices immediately. Tehran demanded that all sanctions against Iran’s oil exports be lifted by the United States to help it slow down its nuclear program. White House, along with other Western nations, demanded that the Islamic Republic cease any activity in relation to making atomic bombs.

 

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Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.