New Delhi:Oil prices rose more than 3 percent on Tuesday, extending the previous day’s recovery of nearly 5 percent as concerns about the impact of the Omicron coronavirus variant on global fuel demand continued to ease.
Brent crude oil futures rose $ 2.36, or 3.2 percent, to $ 75.44 a barrel, after rising 4.6 percent on Monday. US crude West Texas Intermediate rose $ 2.56, or 3.7 percent, to $ 72.05, building on a 4.9 percent increase in the previous session. At Tuesday’s session highs, each contract was up more than $ 3.
Oil prices fell last week on concerns that vaccines against the new Omicron variant might be less effective, raising fears that governments might impose new restrictions that would reduce fuel demand.
However, a South African health official reported over the weekend that the Omicron cases had shown only mild symptoms there, while leading US infectious disease officer Anthony Fauci also said the variant did not seem to be “high in severity”.
“The market was oversold as a knee-jerk reaction to Omicron and its potential proliferation and impact on travel restrictions,” said Gary Cunningham, director of market research for Tradition Energy. “Now we see the market return to expectations of high demand over the next 6-12 months.”
As another sign of confidence in oil demand, the world’s largest exporter, Saudi Arabia, raised monthly crude oil prices on Sunday.
Last week, the Organization of Petroleum Exporting Countries and its allies, a group known as OPEC +, agreed to increase production by 400,000 barrels per day (bpd) in January despite the release of strategic US oil reserves.
“The market is slowly adopting this variant,” said Matt Smith, an analyst at data and analytics company Kpler.
Analysts polled by Reuters predict US crude oil inventories will show a second straight weekly decline. Weekly industry data is due at 4:30 p.m. ET, followed by government numbers on Wednesday.
Oil prices were also supported by delays in the return of Iranian oil, with stumbling blocks for indirect nuclear talks between the United States and Iran. Germany called on Iran on Monday to come up with realistic proposals in the talks about its nuclear program.