Oil prices bounced in a light-volume session on Thursday on signs that the worst effects of the Omicron variant might be more containable than previously feared, even as countries imposed travel restrictions on surging infection levels.
The oil market has wavered in recent days over how seriously to take the threat of another slump in fuel demand. The Omicron variant is more transmissible than previous coronavirus variants, but early data suggests it causes a milder level of illness.
Brent crude futures settled up $1.56, or 2.1%, at $76.85 a barrel, the highest close since Nov. 26, and a gain of 4.5% on the week.
U.S. West Texas Intermediate (WTI) crude futures ended up $1.03, or 1.4%, at $73.79 a barrel, to rise 4.1% on the week. Volume was light on Thursday, with just 244,000 front-month contracts trading, according to Refinitiv Eikon data, compared with a daily average of 381,000 contracts over the last 200 days.
“The demand destruction everybody thought was going to happen isn’t going to happen,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
However, some governments are imposing tighter travel restrictions to slow the spread of the variant, which could hit demand even if Omicron causes a lower level of hospitalization, particularly among the vaccinated.
The Chinese city of Xian on Wednesday ordered its 13 million residents to stay home, while Scotland imposed gathering limits from Dec. 26 for up to three weeks, and two Australian states reimposed mask mandates.
The United States authorized separate antiviral COVID-19 pills manufactured by both Pfizer and Merck, and officials from the U.S. Food and Drug Administration said the medications are both effective against the Omicron variant.
AstraZeneca said a three-dose course of its COVID-19 vaccine was effective against Omicron, citing data from an Oxford University lab study.
Operating U.S. oil and gas rigs rose to their highest levels since April 2020 in the most recent week, according to energy services firm Baker Hughes. Overall counts are now at 586, portending a boost in output in coming months.
Four people were injured at a fire at Exxon Mobil’s Baytown refinery, one of the largest in the United States. The fire is out, and the refinery is adjusting production at the facility, which has the ability to process up to 560,000 barrels per day.
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