Good morning. Oil clawed back some losses after plunging more than 6% over the previous two sessions on nervousness the rapid spread of the omicron virus variant will lead to more lockdowns and restrictions on movement. Against this backdrop, the OPEC+ alliance will decide on their supply policy for January later today. With oil
prices already in a bear market as omicron imperils demand, traders widely expect the producer group to defer a modest increase in output. West Texas Intermediate rose above $66 a barrel in Asia after briefly swinging into the red earlier.
A weakening price structure along the curve suggests crude’s fundamentals have softened. Oil has dropped more than 20% since late October on a White
House-led coordinated reserves release and, more recently, the new virus variant. An increasingly hawkish tone from the Federal Reserve is also weighing on the growth outlook for the U.S. economy. A major, as yet unanswered, question is whether
existing virus drugs will work against omicron. “I don’t think we can call a bottom yet until we understand the effectiveness of the vaccines we have today,” said Wayne
Gordon, a strategist at UBS AG Wealth Management. The market’s likely to remain volatile in the short term, and a pause in restoring supply looks like the most probable outcome of the OPEC+ meeting, he said.
The first infection of the new strain was detected in the U.S., while cases in South Africa doubled from Tuesday. Still, there are those who think oil’s drop has been overdone. Goldman Sachs Group Inc. said prices have “far overshot” the impact of
omicron. Bank of America said it was sticking to its $85-a- barrel forecast in 2022, with possible surges past $100 if air travel rebounds. (Bloomberg)
OIL MARKET ROUND-UP: (Bloomberg)
* OPEC Powerhouses on Course to Drive November Oil Flows Higher
* Emergency Backup for Gas in Winter Sparks Japan to Buy Fuel Oil
* Wild Moves in the Oil Market Draw an Influx of Retail Traders
* U.S. Energy Dept. Says No Changes to Timing, Size of Oil Release
* Crude Inventories Fall, Gasoline Stockpiles Rise: EIA Takeaways
* Oil Option Traders Spend More to Bet on Falling Prices:
* Indian Oil to Raise Iraq Term Oil Imports in 2022; Cut Spot Buys
* U.S. Crude Production Rose to Highest Level Since May 2020
|
