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An oil tanker is loaded in Saudi Arabia. Picture: REUTERS
An oil tanker is loaded in Saudi Arabia. Picture: REUTERS

Oil extended gains — after its biggest weekly advance in more than three months — on more signs that Omicron will not be as bad as initially feared and predictions that China will start adding fiscal stimulus early next year.

West Texas Intermediate futures climbed as much as 1.7% after gaining 8.2% in the first weekly increase since late October to recoup more than half of an Omicron-driven plunge. The new virus variant has not had much impact on global oil demand, Iraq’s oil minister said on Sunday. 

Economists predicted that Beijing will start adding fiscal stimulus in early 2022 after the country’s top officials said their key goals for next year include stabilising the economy. That should further improve sentiment in the market, given that China is the world’s biggest oil importer. 

Oil has staged a remarkable turnaround after tumbling into a bear market after a multiweek plunge. While Asian oil consumers are yet to follow through on their strategic oil releases, the market is weighing the potential impact of such a move or Omicron-related travel restrictions on supply and demand. Citigroup last week lowered its Brent price forecast by $2 a barrel for next year on Omicron fears. 

“The Omicron fears are certainly continuing to shift away from the worst-case scenario,” said Vandana Hari, founder of Vanda Insights in Singapore. “The higher transmissibility is not in doubt but the worst-case fears of a spike in hospitalisation and deaths are certainly receding. Crude still has some more ground to reclaim.”

The first oil from President Joe Biden’s release from the country’s emergency crude reserves is being granted to ExxonMobil, which will receive 4.8-million barrels from the Strategic Petroleum Reserve (SPR) as part of an exchange.

The energy department also confirmed that it will issue a sale notice for 18-million barrels from the SPR on December 17. 

Bloomberg News. More stories like this are available on bloomberg.com

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