Oil Up as Omicron Fears Continue to Ease By

© Reuters.

By Gina Lee – Oil was up Thursday morning in Asia, extending gains as fears about the omicron COIVD-19 variant’s impact on economic recovery and fuel demand continue to ease.

gained 0.51% to $76.21 by 11:46 PM ET (4:46 AM GMT) and rose 0.77% to $72.92.

Initial data showing that a three-shot course of the BioNTech SE (F:)/Pfizer Inc. (NYSE:) COVID-19 vaccine could gave markets a boost.

“Early indications of the omicron variant… suggest that it may be less severe than initially feared given hospitalization rates have not surged,” Commonwealth Bank commodities analyst Vivek Dhar said in a note.

“A third vaccine dose is also showing promising signs of protection against the new variant,” the note added.

However, the black liquid’s gains were capped as some governments reimposed restrictive measures to curb omicron’s spread. The U.K. imposed a work-from-home mandate, while Denmark closed restaurants, bars, and schools. China also halted group tourist trips from Guangdong.

“The risks to demand have not entirely diminished,” ANZ analysts said in a note, with omicron’s discovery sparking a 16% slump in Brent futures from Nov. 25 to Dec. 1. Although more than half of these losses were recovered during the week so far, some investors warned that further recovery could be limited until omicron’s impact on fuel demand becomes clearer.

Brent futures are likely to face resistance around the lower end of the $76.50-$77.50 range, a key support level in late September and late November 2021, said OANDA analyst Craig Erlam.

Meanwhile, Wednesday’s showed a draw of 240,000 barrels for the week ended Dec. 3. Forecasts prepared by had predicted a 1.705-million-barrel draw, while a 910,000-barrel draw was reported during the previous week.

released the day before, showed a draw of 3.809 million barrels.

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