Oil prices gain even as uncertainty on Omicron lingers
04:15, 1 December 2021
Crude oil prices recouped previous day’s losses on Wednesday amid risk uncertainty from the spread of Omicron on oil demand and Organization of Petroleum Exporting Countries’s (OPEC) output decision from Thursday’s meeting.
International benchmark Brent crude oil futures climbed 2.25% to $70.79 per barrel in Asia trading hour, while West Texas Intermediate rose 2.02% at $67.52/bbl.
Brent dropped nearly 5% on Tuesday after US Federal Reserve’s (Fed) chairman Jerome Powell hinted it will end its asset purchase programme earlier than planned. The US central bank could then start raising interest rates from their current lows.
Interest rate hike
The Fed’s started reducing the $120bn a month asset purchase programme weeks ago by approximately $15bn. It means the Fed will cease to buy bonds by June 2022.
“This (Powell’s stement) saw a risk-off tone across markets,” said analysts at ANZ Group in a note on Wednesday.
Higher interest rates could increase consumers’ costs which means people may spend less money on travelling, leading to lower demand for oil.
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Signs of Omicron impacts
The statement came amid the spread of the Covid-19 Omicron variant and as the OPEC and its allies is slated to meet on Thursday to discuss monthly output.
The market continues to look for signs of any impact of Omicron on oil demand, the analysts said.
“Most vaccine providers suggested new shots may be needed, although development time would be quick,” they said.
Read more: Oil prices fall further on Covid-19 vaccine uncertainty
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