Oil prices got hit hard on Omicron lockdown fears and signs that “Build Back Better” is dead. On Fox News Sunday Joe Manchin announced: ” that he is a “no” to President Biden’s massive spending bill.
Bloomberg reported that the likely failure of the Build Back Better legislation had prompted it to lower its real gross domestic product forecasts in 2022 to 2% in the first quarter from the previous 3%; 3% in the second quarter versus the previous 3.5%; and 2.75% in the third quarter from 3% prior. That added to the selling as Goldman Sachs) lowered the US growth forecast.
Yet oil bounced off the lows after the Wall Street Journal reported that a booster dose of Moderna's (NASDAQ:MRNA) Covid-19 vaccine showed signs of working well against the Omicron variant, with the latest lab results suggesting people who are boosted may have good protection against the strain. Perhaps that may slow lockdowns decisions. The New York Times reported that Britain’s health secretary said he wouldn’t rule out more restrictions before Christmas on Sunday, but the prime minister would most likely face sharp pushback from his party.
Lockdowns, though, are overshadowing great demand. Bloomberg reported that despite the surge in COVID cases worldwide, the number of commercial flights tracked by @FlightRadar24 hit on Friday (12/17) the 2nd highest level year-to-date. A lot of that is the upswing of Christmas travelers. Financial Juice reports that Russia’s Deputy PM Novak: On January 4, OPEC+ will address the necessity to amend the agreement conditions. OPEC+ compliance with oil output restrictions increased marginally to 117% in November.
The hit to the oil market may not be over yet. Lockdown fears may create more fear than reality. This week the US should see more oil draws, and products should tighten. Yet, we have to wait until Tuesday until we see that data. Before that, with light holiday volume, we might run on fear.
Natural gas inventories this week should see a drawdown but not as big as one would expect this time of year BAMWX, the weather forecaster is pushing back their call for a polar vortex till about New Year’s Day. Yet globally, the energy transition is causing major problems in Europe Reuters reports that European natural gas prices jumped more than 8% on Monday, nearing an all-time high, with Russian deliveries to Germany through the Yamal-Europe pipeline at very low levels. A rapid rise in gas prices in Europe in 2021 has caused power price rises, concerns about the knock-on effect on inflation, and triggered the collapse of suppliers in Britain.