Crude-oil futures stutter-stepped to a sharply higher finish Monday, with investors shaking off earlier concerns in the session tied to the spread of the omicron variant of the coronavirus that causes COVID-19. Initially, U.S. oil traded under selling pressure, as COVID-fueled travel disruptions over the holiday raised fresh questions about demand for energy, highlighting what has been a seesaw shift in mood amid the viral pandemic. However, crude futures gained support from a focus on optimistic news, including out of China, one of the biggest importers of commodities in the world.
The People’s Bank of China pledged greater support for the real economy, with the central bank saying that it would aim for targeted policy measures to stimulate the world’s second-largest economy. Energy experts also pointed to reported comments from Saudi Energy Minister Prince Abdulaziz bin Salman, in which the energy official of one of the biggest oil producing nations said the world faces a 30 MBD shortfall by the end of the decade, Bloomberg reported. Phil Flynn, senior market analyst at the PRICE Futures Group, also said buying was supported by reports suggesting that Prime Minister Boris Johnson was disinclined, at the moment, to impose mobility restrictions in the U.K. The British leader, however, still appeared to be examining the impact of the spread of omicron domestically.
Crude futures concluded an abbreviated week of trade last week with a 4% weekly rise during the Christmas stretch, with U.S. markets closed on Friday in observance of the holiday. Next week, the Organization of the Petroleum Exporting Countries and its allies, forming a group known as OPEC+, is set to gather Jan. 4. “The group is expected to stick with its decision to raise oil output by a further 400k barrels a day, although some have argued they will be more cautious because of the virus situation,” wrote Fawad Razaqzada, market analyst at ThinkMarkets, in a note dated Friday. “If they do stick with status quo, I think this will put some pressure on oil prices,” the ThinkMarkets analyst wrote.
West Texas Intermediate crude for February delivery was trading $1.78, or 2.4%, higher, to settle at $75.57 a barrel on the New York Mercantile Exchange, after putting in a 4.3% weekly gain on Thursday, which pushed the U.S. benchmark contract to the highest finish since Nov. 24. Meanwhile, February Brent crude, the global benchmark, rose $2.46, or 3.2%, to close at $78.60 a barrel on ICE Futures Europe, following a 3.6% weekly finish on Friday, with the ICE Europe market open on Christmas Eve.
Since the weekend, airlines have canceled thousands of flights globally, citing staffing problems tied to COVID, as travel woes extended beyond Christmas, with no clear indication when normal schedules would resume.
