Oil prices rebounded on Tuesday after a sharp fall in the previous session as investors’ appetite for risk improved, although they remained cautious amid the rapid spread of the Omicron coronavirus variant across the globe.
U.S. West Texas Intermediate (WTI) crude rose 99 cents, or 1.42%, to $70.22 a barrel.
“After a rough couple of days, crude prices are rebounding as much of the COVID wall of worry has been priced in,” said Edward Moya, senior analyst at OANDA.
Countries across Europe were considering new curbs on movement as the fast-moving Omicron variant swept the world days before Christmas, throwing travel plans into chaos and unnerving financial markets.
Omicron infections are multiplying rapidly across Europe, the United States and Asia, including in Japan, where a single cluster at a military base has grown to at least 180 cases.
“This is a pragmatic market that wants to be bullish but knows relief rallies, like the one this morning, will not last,” said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.
“The upside is likely to be limited and more restrictions will be greeted with renewed selling,” he added.
Still, Moderna Inc (MRNA.O) said on Monday that a booster dose of its COVID-19 vaccine appeared to be protective against the fast-spreading Omicron variant in laboratory testing, providing some hope to investors.
On the supply front, OPEC+ compliance with oil production cuts rose to 117% in November from 116% a month earlier, two sources from the group told Reuters, indicating production levels remain well below agreed targets.
In the United States, crude oil inventories were expected to have fallen for a fourth consecutive week, while distillate and gasoline stockpiles likely rose last week, a preliminary Reuters poll showed on Monday.
The poll was conducted ahead of reports from the American Petroleum Institute, an industry group, due on Tuesday, and the EIA, the statistical arm of the U.S. Department of Energy, due on Wednesday.