Oil Rises 3.7% As Still No Sign Of Omicron Demand Impact

Meanwhile, Sen thinks high energy prices in Europe will continue indefinitely: File Image/Pixabay

Tuesday's oil price gains of an impressive 3.7 percent was attributed not to outlook confidence but the purchase of risk assets following a two-day rout inspired by omicron fears.

West Texas Intermediate rose $2.51 to settle at $71.12 per barrel, while Brent settled up $2.46 at $73.98 per barrel.

John Kilduff, founding partner at Again Capital, said, "Folks are booking their profits or end-of-year losses and just waiting for the restart after the new year."

While the oil market structure is flashing bearish signs, omicron hasn't harmed oil demand in the U.S.; and in fact sweet shale crude this week reached the largest premiums against Nymex oil futures in nearly a year.

Additionally, a survey suggests that U.S. stockpiles declined by 2.5 million barrels last week; official figures from the American Petroleum Institute were expected later Tuesday.

Also, city traffic in Europe remained steady last week despite omicron rapidly becoming the dominant Covid strain globally; that may be partially due to reports that both omicron and delta infections are declining in the U.K. and causing no increase in hospitalization rates (for the record, hospitalizations are already sharply declining in South Africa).

For some analysts, the main concern was not Covid, but high energy prices: on Tuesday Amrita Sen, director and founder of Energy Aspects, told media that there would be no respite for European gas consumers any time soon due to tightness, a fall in gas supplies from Russia, and a cold snap on top of a much colder forecast for January.