Oil Prices Jumped As Market Ignored Covid’s New Variant

Oil prices jumped on December 28, with Brent crude trading near $80 a barrel in spite of the rapid spread of the omicron variant of Covid-19, supported by supply outages and expectations that U.S. inventories declined last week. 

Brent crude gained $1.04 or 1.3% to $79.64 a barrel by 11:19 GMT. U.S. West Texas Intermediate (WTI) crude added $1.15% or 1.5% to $76.72. Both of them traded at the highest in a month.

This month, three oil producers declared force majeures on part of their oil production due to maintenance issues as well as oilfield shutdowns.

In the meantime, a preliminary poll showed that U.S. crude oil inventories are likely to have declined for the fifth week in a row.

On December 27, British health minister Sajid Javid made a comment about restrictions. He stated that England will not face any new Covid-19 restrictions before the end of 2021. 

U.S. President Joe Biden, meantime, promised to ease a shortage of Covid-19 tests. The omicron variant already caused serious problems. Airlines canceled thousands of flights over the weekend in the United States. 

The situation is also complicated in China. The country’s symptomatic coronavirus cases rose for a fourth consecutive day on December 27.

Oil prices and OPEC’s meeting

Investors and analysts are waiting for OPEC’s meeting. OPEC+  will decide whether to go ahead with a planned production increase of 400,000 barrels per day in February. At its last meeting, OPEC and its allies stuck to its plans to increase output for January in spite of the omicron variant. 

Money managers increased their net long U.S. crude futures as well as options positions in the week to December 21.