Oil jumps nearly 4% as Omicron impact seen as short-lived

Shafaq News / Oil soared nearly 4% on Tuesday, supported by tight supply and expectations that rising coronavirus cases and the spread of the Omicron variant will not derail a global demand recovery.

Brent crude gained $2.85, or 3.5%, to $83.72 a barrel, its highest settlement since early November. The global benchmark dropped 1% on Monday.

U.S. West Texas Intermediate (WTI) rose $2.99, or 3.8%, to end at $81.22, also its highest price since mid-November. On Monday, it fell 0.8%.

U.S. Federal Reserve Chair Jerome Powell said he expects the economic impact of Omicron to be short-lived, adding that ensuing quarters could be very positive for the economy after the surge driven by the variant subsides.

Brent rose by 50% in 2021 and has rallied further in 2022 as demand has recovered to near pre-pandemic levels whilethe Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, slowly ease record output cuts made in 2020.

However, lack of capacity in some OPEC nations has kept supply additions below the 400,000-barrel-per-day (bpd) increase agreed to last year among the group.

U.S. crude inventories dropped by about 1.1 million barrels last week, according to market sources citing American Petroleum Institute, less than the 2 million-barrel draw estimated in a Reuters poll. Official government data is due on Wednesday.

Source: Reuters