Crude-oil futures reversed course to trade sharply higher Monday, climbing in a session in which investors appeared willing to buy assets considered risky, despite concerns about the spread of the omicron variant of the coronavirus that causes COVID-19.
Initially, U.S. oil traded under selling pressure, as COVID-fueled travel disruptions over the holiday raised fresh questions about demand for energy, highlighting what has been a seesaw shift in mood amid the viral pandemic.
However, investors were focusing on optimistic news, including out of China, one of the biggest importers of commodities in the world.
The People’s Bank of China pledged greater support for the real economy, with the central bank saying that it would aim for targeted policy measures to stimulate the world’s second-largest economy, the PBOC said on Saturday.
Strategists and analysts also pointed to reported comments from Saudi Energy Minister Prince Abdulaziz bin Salman, in which the energy minister of one of the biggest oil producing nations said the world faces a 30-million-a-barrel-a-day supply shortfall by the end of the decade, Bloomberg reported.
Phil Flynn, senior market analyst at the PRICE Futures Group, also said buying was supported by reports suggesting that Prime Minister Boris Johnson was disinclined, at the moment, to impose mobility restrictions in the U.K. The British leader, however, appeared to still be examining the impact of the spread of omicron domestically.
Crude futures concluded an abbreviated week of trade last week with a 4% weekly rise during the Christmas stretch, with U.S. markets closed on Friday in observance of the holiday.
Next week, the Organization of the Petroleum Exporting Countries and its allies, forming a group known as OPEC+, is set to gather Jan. 4.
“The group is expected to stick with its decision to raise oil output by a further 400k barrels a day, although some have argued they will be more cautious because of the virus situation,” wrote Fawad Razaqzada, market analyst at ThinkMarkets, in a note dated Friday.
“If they do stick with status quo, I think this will put some pressure on oil prices,” the ThinkMarkets analyst wrote.
West Texas Intermediate crude for February delivery CLG22, +2.37% CL00, +2.37% was trading $1.97, or 2,7%, higher, to reach $75.76 a barrel on the New York Mercantile Exchange, after putting in a 4.3% weekly gain on Thursday, which pushed the U.S. benchmark contract to the highest finish since Nov. 24.
Meanwhile, Brent crude BRNG22, -0.09%, the global benchmark, was trading $2.54, or 3.3%, higher to reach $78.35 a barrel on ICE Futures Europe, following a 3.6% weekly finish on Friday, with ICE Europe market open on Christmas Eve.
Over the weekend, airlines canceled hundreds more flights, citing staffing problems tied to COVID, as the nation’s travel woes extended beyond Christmas, with no clear indication when normal schedules would resume.
More than 700 flights entering, leaving or flying within the U.S. were called off, according to the flight-tracking website FlightAware, wrote the Associated Press. Still, that figure was down from nearly 1,000 on Saturday. More than 50 flights had been canceled for Monday morning, with the omicron variant of the coronavirus blamed for staffing shortages that forced the cancellations.
Natural-gas futures NG00, +8.84% for January NGF22, +8.84% were trading 27 cents, or 7.3%, higher at $4.004 per million British thermal units on Nymex. The January contract expires at the end of Wednesday’s session.
January gasoline futures RBF22, +1.09% were trading 5 cents, or 2.1%, higher at $2.252 a gallon, while the most-active February contract RBG22, +1.08% was adding 5 cents, or 2.1%, at $2.250 a gallon. Gasoline’s January contract expires at the end of the week.
The most-active February heating-oil contract HOG22, +0.83% was seeing gains of 3 cents, or 1.4%, to trade at $2.357 a gallon.
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