Crude Oil Fluctuates Around $72 Mark

The unfortunate introduction of the new COVID-19 variant called Omicron caused a hysterical reaction in the crude oil market. A lot of analysts, especially those watching the OPEC and OPEC+ associations, fear that another close down looms around the world.

Last year was the first time that crude oil prices entered into a negative buying region as the West Texas Intermediate (WTI) and the London Brent fell to below $0.00.

The only difference this time was that the world wasn’t ready for any lockdown like we experienced last year.

Consequently, WTI crude futures swung between gains and losses on Wednesday, trading around $72 a barrel as investors digested positive news about the new omicron coronavirus variant and attempted to assess its impact on global fuel demand.

The World Health Organization (WHO), the United States Center for Disease Control (CDC), in conjunction with Pfizer and BioNTech, announced that the third dose of their COVID-19 vaccine neutralizes the omicron variant.

This positive news sparked confidence in the crude oil market again as WTI quickly rebounded around the resistance region of $72 – the critical buying zone.

Following this positive news from the WHO, CDC, Pfizer, and BIOTECH, the UK plans to announce fresh restrictions to curb the spread of the virus and initiate a third round of massive vaccination.

According to Trading Economics global macro models and analyst expectations, the API report showed an unexpected drop in crude stocks last week, while crude inventories at Cushing rose by 2.4 million barrels, the largest increase since the week ended February 19th.

Traders now await EIA data later in the day for further updates on demand. It is believed that the EIA data report will have an immediate impact on the price of crude oil.

Crude oil will trade at 64.35 USD/BBL by the end of this quarter. Looking forward, we estimate it to trade at 59.01 in 12 months' time.

Historically, crude oil reached an all-time high of 147.27 in July of 2008.