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Fear of Omicron affects oil futures

By Daniel Tyson

16:47, 9 December 2021

Oil spilling from barrels
Crude oil is processed in oil refineries - Photo: Shutterstock

Crude-oil futures were mixed on Thursday morning after a short rally Wednesday ended on a two-week high as the investors and traders continue to worry about Omicron’s impact on the industry.

At 11:30 am EDT (UTC-5), January delivery for West Texas Intermediate inched up ever so slightly, by less than a penny, to $71.77 a barrel, after rising on Wednesday by 0.4% to end at the highest level since Nov. 24 for a most-active contract, marking a third straight daily gain.


The recently imposed Omicron variant restrictions put pressure on energy demand and crude. On Wednesday, British Prime Minister Boris Johnson suggested remote working and the use of wearing masks in public. In China – a guzzler of crude oil – there are local restrictions on tourist travel.

And at least 70 countries have imposed travel restrictions in response to the new variant by Thursday morning.

Also on Wednesday, Pfizer and BioNTech SE said results from an initial laboratory study found their vaccine “neutralised” the Covid-19 strain after three doses.

However, there are still questions about the Omicron strain. “Until there is more clarity on this matter, oil gains are likely to be capped,” wrote Ricardo Evangelista, senior analyst at ActivTrades, in a note.

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Falling inventory

For the week ending 3 December, US crude inventory dipped by 200,000 barrels, marking the second weekly drop.

Government statistics also showed last week the US Strategic Petroleum Reserves declined by 1.7 million barrels to just above 600 million. Meanwhile domestic crude stocks bumped up by 100,000 to 11.7 million barrels a day.

Natural Gas

2.66 Price
-3.790% 1D Chg, %
Long position overnight fee 0.0458%
Short position overnight fee -0.0678%
Overnight fee time 22:00 (UTC)
Spread 0.0050

Oil - Brent

78.60 Price
-0.680% 1D Chg, %
Long position overnight fee -0.0100%
Short position overnight fee -0.0119%
Overnight fee time 22:00 (UTC)
Spread 0.045

Oil - Crude

73.76 Price
-0.940% 1D Chg, %
Long position overnight fee -0.0200%
Short position overnight fee -0.0019%
Overnight fee time 22:00 (UTC)
Spread 0.030


2,029.10 Price
-2.220% 1D Chg, %
Long position overnight fee -0.0200%
Short position overnight fee 0.0118%
Overnight fee time 22:00 (UTC)
Spread 0.50

Switching back

Prior to crude’s recent deep dive, there was plenty of talk about switching from oil to cheaper sources of energy, mainly coal and natural gas.

Yet, with WTI hovering around $70 and Brent at $75 it is “perfectly possible that the issue of fuel switching to oil for heating purposes and for generating electricity will be raised again. After all, the prices of other energy sources have risen much more steeply than oil prices of late,” said Commerzbank analyst Daniel Briesemann.

January delivery of Brent crude declined by less than 1% $75.21 a barrel on the NYMEX at 11:30 am Thursday.

EIA data also states crude inventory at New York Mercantile Exchanges Cushing, Oklahoma, delivery hub inched up by 2.4 million barrels last week. 

Natural gas

Another commodity being watched closely is natural gas futures. Natural gas continued to free fall on Thursday morning. At noon EDT, it was trading down.

EBW Analytics analysts said in a note that natural gas is struggling to find a bottom. Contracts for January traded down on Thursday morning to an intraday low of $3.73 and issued a dire prediction. “Weak physical demand will extend into early next week” as warmer than usual weather continues.”

Read more: Oil prices continue recovery, while gas prices move in narrow range

Markets in this article

Oil - Brent
Brent Oil
78.597 USD
-0.537 -0.680%

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The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
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