Omicron Pushes Crude Oil Price To Its 4-Week High

With an increase in the Omicron strain of the COVID-19 virus, West Texas Intermediate (WTI) crude futures rose by more than 2 percent on Monday, trading above $72.6 per barrel.

However, with investors trying to access the impact of the omicron strain on PMS demand, the price fluctuated around the $72.4 to $73.1 region, responding to flight cancellations in the US.

According to Trading Economics, more than 2,350 flights were canceled in the US over the holiday weekend, with major airlines citing the spread of omicron among crews as a reason for the disruption.

Trading Economics went further into stress that China reported its highest daily rise in local cases in 21 months over the weekend, with 127 fresh infections in one day in the city of Xian.

Meanwhile, as part of an agreement between Japan and the USA, the Japanese government has agreed to hold an auction on February 9th to sell around 630,000 barrels of crude oil from its national reserve as a part of a coordinated effort to push the price downward.

Furthermore, the markets will be looking at the next OPEC+ meeting on January 4 as the group is set to decide whether to go ahead with a planned 400,000 barrels per day production increase in February.

According to Trading Economics global macro models and analyst expectations, crude oil will trade at $71.64 USD/BBL by the end of this quarter.

Our in-house oil and gas analyst expects the global economy to rebound as demand for heating and greater manufacturing from the USA and China maintains the upward trajectory of crude oil prices.