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Oil rise by 3% despite Covid-19 Omicron variant worries

Investors are looking for bargains following Friday’s sell-off, and there is talk that the Organization of Petroleum Exporting Countries and its allies may halt an output rise in reaction to the spread of Omicron, so oil markets are positive in the Asian session. However, with scant information about the new variation, the atmosphere remained wary.

Brent crude futures, the worldwide benchmark, are currently trading at $74.15 per barrel, up 3.58 percent. This follows a drop of 11.32 percent on Friday. The US standard, West Texas Intermediate (WTI) crude, is currently trading at $71.06 per barrel, up 4.27 percent.

After losing 13.04 percent in the previous session, the stock fell below the $70 trading zone. The decrease on Friday was the benchmark’s lowest in a single day since April 2020.

There are still concerns that the new variation could disrupt the global economic recovery, perhaps affecting oil demand, and that a supply surplus will widen in the first quarter.

Moreover, despite the swift travel restrictions set on Friday, the new form was spotted spreading over the world over the weekend, with fresh cases being discovered in the Netherlands, Denmark, and Australia.

The World Health Organization (WHO) stated, however, that it is yet unknown if the Omicron strain is more transmissible or harmful than other types. Dr. Anthony Fauci, the top US infectious disease official, informed President Joe Biden on Sunday that definitive information on the Omicron would take roughly two weeks.

The joint ministerial monitoring committee of OPEC has been pushed back from Tuesday to Thursday. On Thursday, OPEC+ will meet, and a policy decision on whether to change its plan to increase output by 400,000 barrels per day in January and beyond is expected.

Some experts believe the group will take a break from raising prices after the release of inventories by oil-consuming countries and the potential for demand to be impacted by fresh lockdowns to contain the new variation.

What do you think?

Written by Babatunde Okerayi

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