(Adds oil tagging to Wall Street rally after Fed move)
By Barani Krishnan
Investing.com - Even the biggest crude stockpile drop in three months can’t seem to shake off rising worries about the Omicron.
U.S. crude prices rose Wednesday but fell short of their full potential despite the largest weekly inventory drop in three months reported by the Energy Information Administration.
Reason: Renewed concerns about the latest known variant of the coronavirus.
West Texas Intermediate, the benchmark for U.S. crude, settled up 14 cents, or 0.2%, at $70.87 a barrel. In post-settlement trade, however, it did better, rising to above $71.
London-traded Brent, the global benchmark for oil, settled up18 cents, or 0.2%, at $73.88. In got to above $74 in post-settlement trade.
The late pick-up in crude prices was helped by a rally on Wall Street as the Federal Reserve matched investors’ expectations on forthcoming stimulus taper and rate hikes, after initial worries that the central bank may act too aggressively.
Crude inventories fell by 4.6 million barrels for the week ended Dec. 10, the EIA’s Weekly Petroleum Status Report said earlier in the day.
It was the most barrels to have dropped in a week since mid-September.
Prior to this, crude stockpiles had risen in seven of out 12 weeks, resulting in a net build of 14.5 million barrels over the past three months.
Analysts tracked by Investing.com forecast a decline of just around 1.7 million barrels for last week.
The EIA also said gasoline stockpiles fell by almost 720,000 barrels, snapping two weeks of large back-to-back builds totaling nearly 8.0 million barrels. Analysts had predicted a 1.6-million barrel build instead for gasoline last week.
Inventories of distillates, which is refined into products such as diesel and jet fuel, fell by 2.85 million barrels last week after two previous weeks of builds totaling 4.8 million barrels. Analysts had expected a rise of 1.0 million barrels instead in distillate stocks.
Despite the bullish numbers, crude prices remained in negative territory at first, depressed apparently by latest headlines showing a spike in infections related to Covid’s latest variant.
Omicron cases in Denmark have surged, contributing to a record daily tally of Covid-19 infections, with some statisticians expecting the variant to represent a majority of cases in the Scandinavian country by Tuesday or Wednesday.
In Britain, Omicron is also expected to become the dominant strain by mid-December and will likely represent a majority of cases in Norway just before Christmas, the U.K. Health Security Agency said.
US health agency CDC, meanwhile, estimated that 13% of all Covid cases in New York and New Jersey could be Omicron infections, Directo
“We're already well into a global COVID case wave, & that's with still relatively low Omicron penetration,” Rory Johnston of Commodity Context said on Twitter (NYSE:TWTR).
(Additional reporting by Sam Boughedda)