Peter Nurse   

Investing.com — Oil prices rose Tuesday with supply remaining tight and as confidence grows that the rise in cases of the Omicron variant of Covid won’t derail the global economic recovery. 

At 9:15 am ET (1415 GMT), the futures had traded 2.2% higher to $79.94/barrel and rose 1.9% at $82.37. 

U.S. U.S. Gasoline RBOB Futures fell 1.8% to $2.3173 per gallon.

Although the Organization of the Petroleum Exporting Countries (OPEC+) has made promises to boost production at successive monthly meetings, it has not been able to keep its word.

“This is evident when looking at OPEC production levels for December, where OPEC members within the deal increased output by 150Mbbls/d, against a possible output increase of 250Mbbls/d,” said analysts at ING, in a note.

Although countries such as Kazakhstan and Libya may have begun to restore production after outages unscheduled, inventories worldwide are still lower than historical norms.

The is set to release the first of this week’s supply reports later in the session, and is expected to show another drop in crude stockpiles.

The demand side of Omicron is showing little sign of slowing. According to Reuters, 1.35 Million new Omicron virus infections were reported by the United States on Monday. This number was the highest ever recorded daily total of any country. 

It is encouraging to see that some European governments have relaxed Covid-19 rules in order to continue schools, hospitals, and emergency services. They recognize that Omicron’s variant is safer than the dominant ones.

Data from Europe has also been encouraging, with U.K. increasing 4.6% last month, as compared to December 2019, while Spanish rose 4.8%, which is a significant improvement on the 0.7% revision.

“Omicron has yet to wreak the havoc of the Delta variant and may never do so, keeping the global recovery on track, and OPEC+ compliance meant that spare production capacity was limited,” said Jeffrey Halley, an analyst at OANDA. “Both factors will continue supporting oil’s bullish outlook.”