Oil gains more than 3per cent on speculation Omicron-related drop overdone

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Oil bounded upward Monday, briefly touching highs above US$77 a barrel as some investors viewed Friday’s slump in oil and financial markets as overdone absent more data on the Omicron coronavirus variant.

If the new variant of the virus proves vaccine resistant or more contagious than other variants, it could impact travel, commerce and petroleum demand.

Brent crude was up US$2.28 at US$75.02 a barrel having slid by US$9.50 on Friday. U.S. West Texas Intermediate (WTI) crude was up US$2.93, at US$71.08, having tumbled by US$10.24 in the previous session.

Brent briefly surged above US$77 a barrel, while U.S. crude went above US$72.

Brent prices have given up US$10 in the past two weeks.

“If the market is correct, our math implies that the market is pricing in 3.94 million barrels per day of demand destruction over the next month,” said Michael Tran, an analyst at RBC Capital Markets. “If that sounds excessive, trust your instincts.”

Top officials from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, echoed that view, with the Saudi energy minister quoted as saying he was not worried about the Omicron variant.

The World Health Organization has said it could take weeks to understand the variant’s severity, though a South African doctor who has treated cases said symptoms seemed to be mild so far.




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