The price of oil on Friday rushed to the most significant weekly increase since the end of August. Finally, the anxiety about oil demand eased slightly. The new version of the Omicron coronavirus no longer seems to be a serious threat to the market.
The Brent and WTI indicators have been rising by more than 7% during the current week. Today, futures for Brent crude oil rose by 0.9%, reaching $75.08 per barrel, although, at the end of yesterday's trading session, the quotes of the benchmark brand sank by 1.9%. WTI crude futures rose 1% to $71.68 on Friday. Recall that yesterday's trading day showed a decrease in the cost of oil from West Texas by 2%. At the time of writing the review, WTI oil futures for January delivery were trading at $71.62.
Recall that after the Omicron strain was detected on November 25, the oil market experienced a significant decline, but this week helped oil quotes recover almost half of the lost levels. And all thanks to the publication of the results of Pfizer's research, which showed that three doses of their vaccine have every chance to protect against the Omicron variant. A very optimistic forecast did not leave a certain residual risk that it would be advisable to take into account.
The recovery of oil prices was also facilitated by a report released by the US Department of Energy, which reported small oil production figures in the United States by the end of 2021 – only 11.18 million barrels per day. Analysts expected that the production level would be at least 11.23 million barrels per day.
Despite several positive news for oil quotes, it is worth admitting that, in general, the black gold market remains shaky. For example, strict restrictions in China make it difficult for domestic air transportation in China. Consumer distrust due to repeated outbreaks of the virus exacerbates this situation.
In addition, the rating agency Fitch lowered the rating of the largest Chinese companies China Evergrande Group and Kaisa Group since they published information about the default on offshore bonds. As a result, concerns about slowing growth in China's real estate sector have multiplied. Concern has also grown about the growth of the economy of China, which is the world's largest importer of oil.
The strengthened US dollar also limits the growth of oil quotes. Oil prices usually tend to decline when the US currency begins to feel more confident. This happens for the reason that oil is becoming more expensive for buyers who own a different currency.
Most likely, oil prices will fluctuate in a narrow range in the coming days until significant news appears.