(Updates with settlement prices)
By Barani Krishnan
Investing.com - Crude prices rose Monday, extending last week’s rally in a final push for 2021 on bets over next year’s travel despite continued threats to oil consumption from Covid variants.
But thinner-than-usual trading volumes — due to large numbers of market participants being on holiday — meant that price action could remain volatile in the last four days of the year.
On-off spikes in Covid headlines could also temper moods.
In Monday’s Asian trading hours, U.S. crude’s West Texas Intermediate, or WTI, benchmark was down 0.5%, reacting to the thousands of flight cancellations in the United States over Christmas holidays due to bad weather and new Covid infections via the Omicron variant.
The U.S. Centers for Disease Control and Prevention also said on Monday it was investigating nearly 70 cruise ships after reports of Covid cases on board.
“Lower travel equaling lower economic activity in the US equals lower WTI, the US oil benchmark,” observed Jeffrey Halley, Sydney-based analyst for online trading platform OANDA.
“Momentum is muted though, and I doubt either story will have a lasting impact on oil prices,” Halley added. “The global recovery story for 2022 is still on track. The disruption to goods and services from isolating workers, notably air travel, seems to be the main fallout so far. That is only likely to cause short-term nerves.”
WTI settled up $1.78, or 2.4%, at $75.57 per barrel, after hitting a session bottom of $72.58. Last week, the U.S. crude benchmark was up 4%. Year-to-date, WTI shows a 56% gain.
London-traded Brent, the global benchmark for oil, settled up $2.46, or 3.2%, on the day at $78.60 a barrel. Brent also rose about 4% last week and is up 51% for the year.
Those long crude were also betting on positive market intervention by the OPEC+ oil producers, which was scheduled to hold its monthly meeting next week.
At its last meeting held earlier this month, OPEC+ stuck to its plans to add 400,000 barrels per day in output from January despite a surge in Omicron cases.
Omicron was first detected in November and now accounts for nearly three-quarters of US cases and as many as 90% in some areas, such as the Eastern Seaboard. The average number of new US coronavirus cases has risen 45% to 179,000 per day over the past week, according to a Reuters tally.
While research suggests that Omicron is less lethal than the original Covid-19 strain that broke out in March 2020 — as well as the Delta variant that became rampant earlier this year — few are taking chances once they or those they have been in touch with are infected.
But many people are also defying calls for caution or taking calculated risks as vaccines and boosters against the virus remain readily available and new treatments — such as the world’s first COVID pill by Pfizer (NYSE:PFE) — get approved by the day.