Oil prices extend gains as fears about Omicron ease

London — Oil prices extended gains on Tuesday after a rebound of almost 5% the day before as concerns about the impact of the Omicron coronavirus variant on global fuel demand eased and Iran nuclear talks stalled, delaying the return of Iranian crude to the market.

Brent crude futures were up $1.66, or 2.3%, at $74.74 a barrel by 10.05am GMT, after settling 4.6% higher on Monday. US West Texas Intermediate was at $71.30 a barrel, up $1.81, or 2.6%, building on a 4.9% gain in the previous session.

Oil prices were pummelled last week by concerns that vaccines might be less effective against Omicron, causing fear that governments may reimpose restrictions to curb its spread and hit global growth and oil demand.

However, a South African health official reported at the weekend that Omicron cases there had shown only mild symptoms. Also, the top US infectious disease official, Anthony Fauci, has told CNN “it does not look like there's a great degree of severity” so far.

“The Fauci comments overnight saw more fast money returning to the long oil trade as markets started pricing a resumption of the global recovery and higher oil consumption,” said Jeffrey Halley, senior market analyst at Oanda.

In another sign of confidence in oil demand, Saudi Arabia, the world’s top exporter, raised monthly crude prices on Sunday.

That came after Opec their allies, known as Opec+, agreed to continue raising output by 400,000 barrels a day in January despite the release of US strategic petroleum reserves.

Crude imports to China, the world’s biggest importer, also rebounded in November, while a Reuters poll shows US crude inventories probably fell for a second straight week last week.

In addition, a delay in the return of Iranian oil supported prices as indirect US-Iran nuclear talks have hit roadblocks. Germany urged Iran on Monday to present realistic proposals in talks about its nuclear programme.

Reuters