Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Oil jumps nearly 4% as Omicron impact seen as short-lived

CommoditiesJan 11, 2022 22:20
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A 3D printed oil pump jack is seen in front of displayed Opec logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/Illustration

By Arathy Somasekhar

(Reuters) - Oil soared nearly 4% on Tuesday, supported by tight supply and expectations that rising coronavirus cases and the spread of the Omicron variant will not derail a global demand recovery.

Brent crude gained $2.85, or 3.5%, to $83.72 a barrel, its highest settlement since early November. The global benchmark dropped 1% on Monday.

U.S. West Texas Intermediate (WTI) rose $2.99, or 3.8%, to end at $81.22, also its highest price since mid-November. On Monday, it fell 0.8%.

U.S. Federal Reserve Chair Jerome Powell said he expects the economic impact of Omicron to be short-lived, adding that ensuing quarters could be very positive for the economy after the surge driven by the variant subsides.

"Omicron has yet to wreak the havoc of the Delta variant and may never do so, keeping the global recovery on track," said Jeffrey Halley, analyst at brokerage OANDA.

Brent rose by 50% in 2021 and has rallied further in 2022 as demand has recovered to near pre-pandemic levels while the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, slowly ease record output cuts made in 2020.

However, lack of capacity in some OPEC nations has kept supply additions below the 400,000-barrel-per-day (bpd) increase agreed to last year among the group. [OPEC/O]

Recent outages in Libya have also buoyed prices, and the National Oil Corp said it was suspending exports from the Es Sider terminal.

"Combination of facts - that demand is going to be stronger than anticipated and that OPEC's supply may not grow as fast as the demand - is why prices are climbing," said Phil Flynn, senior analyst at Price Futures Group.

U.S. crude inventories dropped by about 1.1 million barrels last week, according to market sources citing American Petroleum Institute, less than the 2 million-barrel draw estimated in a Reuters poll. Official government data is due on Wednesday. [API/S][EIA/S]

European refiners' crude and oil products stocks in December dropped by more than 11% from a year earlier, Euroilstock data showed. At the same time, European jet fuel refining margins, are back to pre-pandemic levels as global aviation activity recovers despite the spread of Omicron.

Meanwhile, the U.S. government lowered its oil output growth estimates, while raising its oil demand forecast.

Production was estimated to rise by 640,000 bpd this year, lower than last month's forecast of a 670,000 bpd increase. Total oil demand was now seen rising 840,000 bpd for the year, higher than the 700,000-bpd increase expected last month. It is estimated to rise by another 330,000 bpd in 2023.

Oil jumps nearly 4% as Omicron impact seen as short-lived
 

Related Articles

Gold Rises 2% on Week; First Weekly Win in Five
Gold Rises 2% on Week; First Weekly Win in Five By Investing.com - May 20, 2022

By Barani Krishnan Investing.com -- Gold prices rose 2% on the week to give longs in the game their first weekly win in five. While they may have secured a break from their gloom...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email