By Adedapo Adesanya
Oil prices rebounded by more than 3 per cent on Tuesday after a sharp fall in the previous session as investors’ appetite for risk improved as the market continued to watch out for the rapid spread of the Omicron coronavirus variant across the globe.
Brent crude gained $2.47 or 3.45 per cent to trade at $73.99 per barrel while the US West Texas Intermediate (WTI) rose $2.57 or 3.75 per cent to settle at $71.18 per barrel.
Crude prices are rebounding after several countries across Europe mulled new curbs on movement as the fast-moving Omicron variant swept the world days before Christmas, landing the oil market in the bearish territory.
The rapidly multiplying count of Omicron cases around the world has sparked fears in the oil market of another period of weak demand, with the new strain already becoming the dominant COVID variant in the United States.
Despite early indications of Omicron being less lethal, the market will still have to wait out this period of bearish news before it can regain its bullish sentiment.
In the Netherlands, urban centres were largely deserted as the country began a snap lockdown that threw people’s Christmas plans into disarray.
Prime Minister Mark Rutte announced the shutdown on Saturday evening, ordering the closure of all but essential stores, as well as restaurants, hairdressers, gyms, museums and other public places from Sunday until at least January 14.
Omicron, a very contagious variant first detected last month in southern Africa and Hong Kong, has raced around the globe and been reported in 89 countries, the World Health Organization (WHO) said.
Prices also got support from skirmishes in Libya that led to a force majeure on oil exports have provided some upward pressure on prices.
Libya’s National Oil Company (NOC) said that crude oil production has been shut in from four of Libya’s oilfields, including the contested El Sharara which has a capacity of 300,000 barrels per day.
Other oilfields that are shut in include El Feel, Wafa, and Hamada. The oilfields were shut in by members of the Petroleum Facilities Guard (PFG), which is tasked with protecting the oilfields, according to the NOC.
The PFG reportedly closed a valve on a pipeline going from Sharara to the Zawiya port, and another value from Wafa to Mellita.
Prices also found support on news that the US crude oil inventories fell for the fourth week in a row. The Energy Information Administration (EIA) will release its figure on Wednesday following an earlier release from the industry watch group, the American Petroleum Institute (API).
Modupe Gbadeyanka