Oil cuts gains, but ends higher after Friday drop

A sticker indicates crude oil on the side of a storage tank in the Permian Basin in Mentone, Loving County, Texas, USA, November 22, 2019. REUTERS / Angus Mordant

NEW YORK, Nov. 29 (Reuters) – Oil slashed gains on Monday night, but ended the session higher as investors viewed Friday’s collapse in oil and financial markets as overkill in the absence of more data on the variant of the Omicron coronavirus.

Brent briefly exceeded $ 77 a barrel, while US crude hit highs above $ 72. However, both contracts gave up gains at the end of the session.

Brent crude futures were at $ 73.44 a barrel, up 72 cents or 1%, after slipping $ 9.50 on Friday. U.S. West Texas Intermediate (WTI) crude gained $ 1.80, or 2.6%, to $ 69.95 a barrel. The contract fell $ 10.24 in the previous session.

In post-settlement trading, Brent briefly entered negative territory on low volumes.

Friday’s drop was the biggest one-day drop since April 2020, reflecting fears that coronavirus-related travel bans are hammering demand. The plunge was exacerbated by the drop in liquidity due to a public holiday in the United States.

“We believe the fall in oil prices has been exaggerated,” said Michael Tran, analyst at RBC Capital Markets, noting that the sharp drop in prices suggests a much lower level of demand than at present.

If the new variant of the virus is found to be resistant to the vaccine or more contagious than the other variants, it could impact travel, trade and demand for oil.

The World Health Organization has said it could take weeks to understand the severity of the variant, although a South African doctor who has treated cases has said symptoms have so far appeared to be mild. Read more

Senior officials from the Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, echoed the view, with the Saudi Energy Minister saying he was not worried. not the Omicron variant.

Omicron has created a new challenge for OPEC +, which is meeting on December 2 to discuss whether to proceed with a planned increase in oil production in January. OPEC + has postponed technical meetings this week to save time to assess the impact of Omicron.

Brent prices have fallen by $ 10 in the past two weeks.

President Joe Biden urged Americans not to panic over the new COVID-19 variant Omicron and said the United States is working with pharmaceutical companies to develop contingency plans if new vaccines are needed. Read more

Saudi Energy Minister Prince Abdulaziz bin Salman al-Saud said he was not worried about Omicron, Asharq Business reported, while his Russian counterpart said he saw no need urgent action in the market. Read more

Reporting by Jessica Resnick-Ault in New York Additional reporting by Yuka Obayashi and Alex Lawler Editing by Marguerita Choy and Matthew Lewis

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