Oil tests pre-Omicron highs on economic growth hopes

Oil edge lower as investors try to assess Omicron’s full impact

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According to Reuters, as investors tried to assess the full impact of the Omicron coronavirus variant on global fuel demand and the effectiveness of existing vaccines, oil prices fell slightly on Wednesday, reversing the gains made earlier this week.

At 0129 GMT, Brent crude oil futures fell 25 cents, or 0.3%, to $75.19 a barrel, and closed up 3.2% on Tuesday. US West Texas Intermediate crude oil was quoted at US$71.86 per barrel, down 19 cents or 0.3%, and rose 3.7% in the previous trading day.

Oil prices rebounded earlier this week from a collapse last week on rising optimism that the new Omicron variant will not cause major economic damage.

“After having been oversold last week on fears about the Omicron s impact, there has been a correction this week on signs the Omicron may be mild,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

“But investors are still not fully optimistic and are taking a wait-and-see approach until they learn about Omicron s full impact,” he said.

The Omicron variant of the coronavirus can partially evade the protection from two doses of Pfizer and partner BioNTech s COVID-19 vaccine, the research head of a laboratory at the Africa Health Research Institute in South Africa said on Tuesday.

British drugmaker GSK, meanwhile, said on Tuesday its antibody-based COVID-19 therapy with U.S. partner Vir Biotechnology is effective against all mutations of the Omicron variant.

Kikukawa said investors are also concerned about Iran’s nuclear negotiations, the tensions between Russia and Ukraine, and the winter weather in the northern hemisphere.

Indirect talks between Washington and Tehran on the resumption of the nuclear agreement resumed a week ago, but were interrupted on Friday and scheduled to resume later this week, as Western officials expressed disappointment at Iran’s overall demands.

A spokesman for the German Foreign Ministry said on Monday that Germany hopes Iran will make realistic proposals in the negotiations on its nuclear program.

At the same time, a senior congressional aide told Reuters on Tuesday that US officials told members of Congress that they had reached a consensus with Germany to close the Beixi 2 natural gas pipeline if Russia invaded Ukraine.

Investors have little reaction to the weekly inventory data in the US. Market sources cited data from the American Petroleum Institute on Tuesday that US crude oil inventories fell last week, while gasoline and distillate inventories increased.

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