Americas News
Oil Rises Again As Analysts Reverse Gears And Worry About Supply, Not Omicron
The possibility that omicron may be far less severe than previous strains of Covid – something scientists have stated repeatedly and borne out by by low hospitalization figures for a month now – was credited for causing another upward swing in oil prices on Thursday.
After a U.K. health agency said omicron was less likely to lead to hospitalizations than Delta and U.S. regulators approved of Merck & Co.’s Covid-19 treatment pill, West Texas Intermediate rose $1.03 to settle at $73.79 per barrel.
Brent climbed $1.56 to $76.85 per barrel.
Edward Moya, senior market analyst at Oanda Corp., said, “Crude prices stabilized after a rash of mostly positive Covid vaccine/treatment headlines in the fight against omicron.
“It seems all the major catalysts that await oil in the New Year lean towards higher prices.”
Moya also pointed out that even if governments impose restrictive measures to try and stem omicron infections, “Prices won’t break since OPEC+ [the Organization of the Petroleum Exporting Countries] can easily adjust their production levels.”
Abandoning for the time being worry over demand, analysts on Thursday reversed gears and worried about tight supply instead, due to Exxon Mobil extinguishing a fire at its 561,000 barrel per day (bpd) Baytown oil-processing facility in Texas, one of the U.S.’s biggest.
Andrew Lebow, senior partner at Commodity Research Group, said, “The Baytown refinery fire could potentially tighten gasoline supplies in the U.S. and it’s happening while crude stocks are being drawing down domestically.”
Also, Francisco Blanch, global head of commodities and derivatives research at Bank of America, on Thursday told Bloomberg television that he was bullish for oil in 2022 and that there would likely be not enough oil to satisfy all global expectations.
He added that oil prices could well spike if omicron comes and goes quickly and air travel returns to pre-pandemic rates; currently, Bank of America’s forecast for Brent for 2022 is $85 per barrel and $82 for West Texas Intermediate.
In other oil news on Thursday, the U.S. Energy Department awarded 250,000 barrels of crude to Marathon Petroleum Corp. as the second release from the strategic reserve; Exxon Mobil Corp. was granted the first batch of crude under the White House’s attempt to lower energy costs.
