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US oil prices bounce back, but worries over Omicron remain

By Daniel Tyson

19:38, 21 December 2021

Barrels of oil with dollar sign
Oil futures recover, but Omicron still worries investors - Photo: Shutterstock

Oil prices rallied Tuesday after a sharp fall during Monday’s session, but traders and investors continue to worry about the rapid spread of the Omicron variant and the impact of renewed restrictions on fuel demand.

West Texas Intermediate was up 3.88% to $71.27 a barrel by 14:00 EDT (UTC-5) while Brent also climbed back to $74.04 a barrel. Natural gas, which has lost ground the last several sessions, rebounded at $3.92, up 2.19% Tuesday afternoon.

Rallies won't last

"This is a pragmatic market that wants to be bullish but knows relief rallies, like the one this morning, will not last," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates told Reuters.

"The upside is likely to be limited and more restrictions will be greeted with renewed selling," he said.

A growing number of countries are considering closing their borders or reinstituting social distancing rules as Omicron continues its rapid spread. Several nations are on high alert only days before celebrating Christmas and New Year’s. Within the last 24 hours, the US reported its first death caused by the Omicron variant. 

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23.02 Price
-3.350% 1D Chg, %
Long position overnight fee -0.0204%
Short position overnight fee 0.0122%
Overnight fee time 22:00 (UTC)
Spread 0.020

Natural Gas

2.52 Price
-0.450% 1D Chg, %
Long position overnight fee 0.0718%
Short position overnight fee -0.0937%
Overnight fee time 22:00 (UTC)
Spread 0.0050

Oil - Crude

71.41 Price
+2.320% 1D Chg, %
Long position overnight fee -0.0204%
Short position overnight fee -0.0015%
Overnight fee time 22:00 (UTC)
Spread 0.030


2,004.85 Price
-1.180% 1D Chg, %
Long position overnight fee -0.0198%
Short position overnight fee 0.0116%
Overnight fee time 22:00 (UTC)
Spread 0.50

Supply shortage

As reported two weeks ago, OPEC+ nations continue to struggle with producing 400,000 extra barrels a month to meet demand. Sources confirmed to that OPEC+ nations did not come close to fulfilling that target in November. Several OPEC+ nations, mainly in Africa, do not have the infrastructure needed to produce the agreed-upon amount, two sources said.

The US Energy Information Administration released data Monday showing WTI future prices declined to $3.06 a barrel from last week, but were up $19.19 from the same period in 2020. 

New EIA production reports are due Wednesday. 

Read more: Lockdown effect on energy prices are offset by vaccine protection

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The difference between trading assets and CFDs
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.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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