Jessica Jaganathan

SINGAPORE, (Reuters) – Oil prices rose on Tuesday. However, price gains were limited by investor concerns about the demand for oil after new restrictions in Europe and Asia were imposed due to a rising number of coronavirus infections.

By 0113 GMT futures were 1 cent higher at $74.40 a barrel, and U.S. West Texas Intermediate oil futures increased 1 cent per barrel to $71.30

Edward Moya (OANDA senior analyst) stated that although energy traders aren’t interested in betting against OPEC+, the short-term risk from Fed tightening and Omicron-to-Fed tightening has been very disruptive to oil prices short term outlook. 

“The virus spread across Europe is delivering a bigger hit than expected and when you calculate family gatherings for the holidays, the short-term outlook could get slashed over the next month.”

The Omicron variant was being spread by governments all over the globe. This includes Norway and Britain.

One person died from Omicron coronavirus variant in Britain, which is the fastest-growing strain of the virus.

China’s largest manufacturing province Zhejiang faces its COVID-19 first cluster. This year, tens to thousands of residents in quarantine or virus-hit regions are forced from work, cancelling events and cutting flight operations.

Tuesday’s cut by Asian Development Bank for the year 2012 and 2013 was due to uncertainty and risks posed by Omicron coronavirus, which may also impact oil demand.

The Organization of the Petroleum Exporting Countries still raised the world oil demand forecasts for the first quarter of 2022. It also maintained its timeline to return to pre-pandemic oil consumption levels. They said that the Omicron coronavirus variant would only have a slight and short impact.

The U.S. Energy Information Administration released Monday’s monthly forecast that showed the supply of shale gas is on the rise. According to the U.S. Energy Information Administration, the January record for U.S. shale output was expected to be broken.