- Crude oil futures were lower in mid-morning trade in Asia Dec. 15, extending losses from the previous session, as concerns over an impending surge in COVID-19 cases from the omicron variant mounted.
- Data from the US Centers for Disease Control and Prevention Dec. 14, meanwhile, showed that the omicron variant was spreading rapidly through the country and may cause a significant surge in infections as soon as January.
- While analysts maintained that the long-term outlook for oil remained bullish, prices were expected to remain highly volatile in the interim as investors responded to news about the virus.
Concerns over a predicted rise in COVID-19 cases from the omicron type pushed crude oil futures lower in Asia mid-morning trade on Dec. 15, extending losses from the previous session as reported by S&P Global Platts.
Contract down
The ICE February Brent futures contract was down 53 cents/b (0.72%) from its previous finish of $73.17/b at 10 a.m. Singapore time (0200 GMT), while the NYMEX January light sweet crude contract was down 60 cents/b (0.85%) to $70.13/b at 10 a.m. Singapore time (0200 GMT).
Concerns about the omicron variety resurfaced when new information revealed the virus’s fast-spreading nature, as well as government actions to halt its spread, which is predicted to harm oil consumption.
COVID-19 vaccination
A South African study published on Dec. 14 found that a two-dose regimen of Pfizer-COVID-19 BioNTech’s vaccination was less successful than the delta form in keeping omicron-infected persons out of the hospital, albeit protection was still excellent at around 70%.
Meanwhile, data released by the US Centers for Disease Control and Prevention on Dec. 14 showed that the omicron form was fast spreading across the country and might cause a major increase in infections as early as January.
As of Dec. 11, the omicron form was responsible for 3% of COVID-19 infections in the United States, according to the CDC.
COVID-19 instances
“The worry wall had simply become too high… Despite another positive research for the Pfizer COVID vaccine, hospitalizations are on the rise in some widely vaccinated [US] states, according to the current surge “, In a report dated Dec. 15, OANDA senior market analyst Edward Moya stated.
“Demand for jet fuel and kerosene is likely to be affected if limitations continue, amid mounting COVID-19 instances, and [as] the public shuns travel,” according to ANZ Research analysts Brian Martin and Daniel Hynes.
While analysts maintained a bullish long-term prognosis for oil, prices were expected to be highly volatile in the meantime as investors reacted to the virus news.
In a note, OCBC Treasury Research analysts wrote, “We expect Brent to consolidate within $70-$75/b in the short term, and crude oil to continue its ascent in 2022.”
Did you subscribe to our newsletter?
It’s free! Click here to subscribe!
Source: S&P Global Platts
