Crude oil futures rose to a one-week high last night (Dec. 6) after speculators and traders became active in the market, speculating that the impact of the new variant would be less severe than expected by the mainstream media. Investors are looking more anxiously at the possible impact of the new variant and the oil price adjustments made by Saudi Arabia.
- WTI crude futures were up $3.23, or 4.9%, at $69.49 a barrel.
- BRENT crude futures was up $3.20, or 4.6%, at $73.08 a barrel.
The key factor was investor concerns about the economic impact and demand for oil threatened by the Omicron virus.
As Anthony Fauci, head of the White House COVID-19 Control Working Group said yesterday:
“Although it seems too soon to come to a conclusion on this matter. But so far we have not had data showing that the Omicron virus causes serious illness.”
Further, major oil exporter Saudi Arabia has announced a price increase for all grades of crude oil for Asian and U.S. customers in January. Compared with the previous month, prices will rise by around 80 cents.
In response, OPEC+ indicated that it continues to keep open the possibility of adjusting its policy quickly, based on the situation. If demand is affected by the spread of the Omicron strain, OPEC+ is prepared to hold an emergency meeting ahead of its original schedule on January 4, 2022. More recently, rumors have surfaced that actual production levels are far below OPEC+’s indications.
Meanwhile, investors are watching the EIA’s weekly U.S. crude oil inventory report, which is scheduled for release tomorrow.
The Spot Market is Open
Tuesday, December 7, 2021