Crude oil rallies on reduced threats of Omicron’s severity

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Crude oil rallies on reduced threats of Omicron’s severity

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 Crude oil rallies on reduced threats of Omicron’s severity
Image source: © Bashta | Megapixl.com

Highlights

  • Crude oil prices rose on Thursday.
  • The prices had been struggling on concerns that the supply will exceed the demand in 2021 due to rising cases of the new virus variant.
  • Xian city in China ordered 13 million residents to stay at home.

Crude oil prices rallied on Thursday on signs that the Omicron variant of coronavirus is less severe than previously feared. The Omicron variant of coronavirus causes a milder level of illness though it spreads at a much faster rate than the earlier variants. Crude oil prices declined earlier as rising cases of the new variant of coronavirus in the US and Europe strengthened worries among investors that new restrictions to curb the spread of the virus will dent the oil demand.

Oil prices have been struggling on concerns that the supply will exceed the demand in 2021 due to rising cases of the new virus variant.

March delivery Brent Crude oil futures last traded at US$76.52 per barrel down 0.10%, whereas February delivery WTI crude oil futures traded 1.32% up at US$73.72 per barrel as of 24 December 2021 at 12:20 PM AEDT.

Omicron fear dampening oil demand

On Sunday, Netherland announced lockdown with the possibility of more stringent restrictions being imposed, ahead of Christmas. Health officials of the US urged Americans to take the booster shot and be careful on traveling over the winter holidays.

Rising COVID-19 cases

Source: © Michalsuszycki | Megapixl.com

On Wednesday, Xian city in China ordered 13 million residents to stay at home while Scotland imposed limits on gatherings from 26 December 2021 for up to three weeks. At the same time, two states in Australia reimposed mask mandates.

Oil prices tumbled significantly on Monday despite the announcement of Moderna Inc. that a booster dose will be sufficient to protect against Omicron, as per the laboratory testing.

Bottom Line

Crude oil prices rallied on Thursday on indications that the new variant of coronavirus is less severe than it was thought earlier.

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