Singapore: Oil prices rose slightly after rebounding by nearly 5% on the previous day on Tuesday, because concerns about the impact of the Omicron variant on global fuel demand have eased, and Iran’s nuclear negotiations have encountered obstacles that delayed the restoration of Iran’s crude oil supply.
At 0124 GMT, Brent crude oil futures rose 34 cents, or 0.5%, to $73.42 per barrel, and closed up 4.6% on Monday. US West Texas Intermediate crude oil was quoted at US$69.92 per barrel, an increase of 43 cents or 0.6% on the basis of a 4.9% increase in the previous trading day.
Due to concerns that the vaccine may be less effective on the new coronavirus variant Omicron, oil prices have been hit hard last week, sparking concerns that governments may re-implement restrictions to curb its spread and combat global economic growth and oil demand.
However, South African health officials reported over the weekend that the Omicron cases there showed only mild symptoms. In addition, Anthony Fauci, the top US infectious disease official, told CNN that so far, “it does not appear to be of great severity.” read more
“This lowers the probability of the worst case scenario that the oil markets have been pricing in over the past couple of weeks,” ANZ analysts said in a note.
In another sign of confidence in oil demand, the world’s top exporter Saudi Arabia raised monthly crude prices on Sunday. This comes after the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, agreed to continue raising output by 400,000 barrels per day in January despite the release of U.S. strategic petroleum reserves. read more
A delay in the return of Iranian oil also supported prices. Indirect U.S.-Iran nuclear talks have hit roadblocks. Germany urged Iran on Monday to present realistic proposals in talks over its nuclear programme. read more
“While negotiations could still find success when they recommence later this week, markets may need to consider a more prolonged delay to Iranian oil exports,” Commonwealth Bank of Australia’s commodity analyst Vivek Dhar said in a note.
“That’s positive for oil prices and supports OPEC+ plans to boost oil production through 2022.”
Meanwhile, Iraq has also expressed optimism over demand and higher prices while global oil and gas executives warned of underinvestment and the need for fossil fuels despite a push for cleaner energy. read more
“It appears the major oil price selloff is over as the mid-$60s has provided strong support and has been accompanied with a steady reminder that the oil market will remain vulnerable to some shortfalls over the next couple of years,” OANDA analyst Edward Moya said in a note.