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Oil futures on Friday were trading sharply higher for a second session, but set for lackluster weekly move, capping a turbulent stretch of trade in energy trading, amid the emergence of omicron, a concerning strain of the coronavirus that causes COVID-19.
Crude markets have achieved a tenuous level of buoyancy following Thursday’s decision by the Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, to rollover a current production policy and raise monthly overall output by 400,000 barrels per day in January.
A recent report that Saudi Arabia, the world’s largest producer of oil and the de facto head of OPEC, may raise prices for Asia in January for its Arab Light crude, also has lifted bullishness within the crude complex that demand for oil remains healthy.
However, worries about the near-term demand, in the face of the new variant is expected to continue to weigh on markets.
“It’s been a week since the sudden plunge of the oil price and the oil trading environment is not out of the tunnel just yet, but overall positivity today is helping Brent prices to a $72 per barrel, despite the still unquantified risks from the Omicron variant,” wrote Louise Dickson, senior oil markets analyst at Rystad Energy, in a daily note.
Dickson said that OPEC+’s decision to technically keep its meeting “in session,” until the next scheduled gathering on Jan. 4, delivers an upbeat message about the demand prospects for oil, even though the cartel’s decision to hold its output policy, and eventually raise it next year, could be interpreted as bearish for prices.
Read: OPEC+ takes unusual tack by keeping existing production policy and leaving its meeting ‘in session’
“The relatively quick decision to go ahead with a planned supply increase with modifications is not what the market was pricing in, with OPEC+ pointing to the still unknown impacts and severity of omicron, pending more detailed guidance from vaccine manufacturers and the World Health Organization,” the analyst wrote.
Against that backdrop, West Texas Intermediate crude for January delivery
CLF22,
CL00,
was trading $1.82, or 2.7%, higher at $68.32 a barrel on the New York Mercantile Exchange, following a 1.4% gain on Thursday.
Meanwhile, February Brent crude
BRNG22,
BRN00,
the global benchmark, was trading $1.87, or 2.7%, to reach $71.55 a barrel on ICE Futures Europe, following a 1.2% advance in the prior session.
For the week, WTI is set for a weekly gain of 0.2% and Brent was on track for a slightly weekly decline of 0.1%.
