By Adedapo Adesanya
Oil prices climbed by more than 3 per cent on Tuesday, extending the previous day’s rebound as concerns eased further about the impact on global fuel demand of the Omicron coronavirus variant.
Brent crude gained $2.36 or 3.2 per cent to trade at $75.44 per barrel while the West Texas Intermediate (WTI) crude added $2.56 cents or 3.6 per cent to sell at $72.05 per barrel.
Oil rebounded earlier this week from a collapse last week on rising optimism that the new omicron variant will not cause major economic damage.
After having been oversold last week on fears about the omicron’s impact, there has been a correction this week on signs the Omicron may be mild.
The rebound started on Monday after Saudi Arabia signalled optimism about the demand by hiking its official January crude oil selling prices for Asia and the US—its biggest markets.
Amid heightened worry about the course of the pandemic after the emergence of Omicron, Saudi Arabia injected a dose of confidence in markets by raising its official selling price for its flagship Arab Light to a nearly two-year high.
Gains for crude also came from the stalled nuclear talks between Iran and other Western countries, reducing the chances of Iranian crude returning to the market.
Analysts also noted that the outlook for oil demand has returned to being positive, while oil supply remains tight as economies continue to reshape from the headwinds of 2020.
This is seen as the Organisation of the Petroleum Exporting Countries and allies (OPEC+) stuck to its plan of pumping 400,000 barrels a day into the markets in January as well.
Optimism also came as China’s imports increased 31.7 per cent year-on-year in November, while its exports gained 22 per cent, according to data from the world’s largest crude importer.
In addition, imports of oil rose 14.3 per cent to 10.17 million barrels per day in November, up from 8.9 million barrels per day in the month before, although still below the 11.04 million barrels per day from the same period last year.
The American Petroleum Institute (API) estimated the inventory draw for crude oil to be 3.089 million barrels indicating that US crude stockpiles have shed some 60 million barrels since the beginning of the year.
Analyst expectations for the week were for a build of 2.093-million barrels for the week.
Traders will get an update on U.S. petroleum supplies from the Energy Information Administration (EIA) later on Wednesday.
On average, analysts expected the EIA to report a drawdown of 1.2 million barrels in U.S. crude stockpiles for the week ended December 3.
