Has Omicron Fear Eased? International Oil Prices Reach Highest in a Month

[Asia Economy Reporter Seulgina Jo] International oil prices recently reached their highest level in a month as supply and demand concerns surrounding the new COVID-19 variant Omicron eased.

On the 27th (local time) at the New York Mercantile Exchange (NYMEX), February West Texas Intermediate (WTI) crude oil closed at $75.57 per barrel, up $1.78 (2.4%) from the previous trading day. It rose more than 4% over the past week. February Brent crude on the London ICE Futures Exchange also traded at $79.01 per barrel, up 3.77% ($2.876).

This is the highest level since November 26, when Omicron was confirmed as a new variant. At that time, international oil prices plunged more than 10% following the news of the new Omicron variant. However, despite the rapid spread, initial studies showing that Omicron symptoms are mild have eased the negative impact on investor sentiment.

Leona Liu, an analyst at DailyFX Singapore, said, "Although Omicron is spreading faster than any other COVID-19 variant, there is relief that most of those infected so far are showing mild symptoms."

The impact of the Omicron variant on global demand in 2022 is also expected to be limited. Earlier, the Organization of the Petroleum Exporting Countries (OPEC) stated in a report that the effects of Omicron are expected to be mild and short-term, and its impact on the oil market will not be significant. Major governments, including the UK, have also decided not to introduce new restrictions to curb the spread of Omicron for the time being.

On the same day, energy-related stocks rose in the New York stock market following the increase in international oil prices. APA Corporation rose 7.3% and Devon Energy increased 6.1% compared to the previous session. The energy sector in the S&P 500 index is expected to deliver the best performance this year. International oil prices have risen more than 50% since the beginning of the year. The year-to-date increases for WTI and Brent crude are 55.75% and 52.53%, respectively.

Investors are focusing on the OPEC+ meeting scheduled for January 4, where a final decision is expected on increasing oil production by 400,000 barrels per day. Talks to restore the Iran nuclear deal (JCPOA - Joint Comprehensive Plan of Action) also resumed on the 27th in Vienna, Austria. Although oil exports are a major agenda item, no significant progress has been reported yet.

However, the rapid spread of COVID-19 remains a concern. The daily average of new COVID-19 cases in the United States is in the 200,000 range, the highest level since January this year. In France, more than 100,000 new cases were reported on the 26th for the first time since the pandemic began.

This content was produced with the assistance of AI translation services.