Investor’s view on Omicron coronavirus variant leading for Friday’s slump in oil and financial markets to be overdone, hence oil prices rebounded by almost 5% on Monday to $76 a barrel.
The World Health Organisation on the other hand has warned that understanding the variant’s severity could take time running into weeks. According to a South African doctor who has treated cases said symptoms of the variant were so far mild.
The market summary –
• Brent crude after sliding $9.50 on Friday by 0920 GMT was $3.41, or 4.7%, higher at $76.13.
• The U.S. West Texas Intermediate (WTI) crude having tumbled $10.24 in the previous session was up $3.07, or 4.5%, at $71.22.
• On Monday, the European shares also rebounded, while safe-haven bonds lost ground.
• On Friday, as investors feared virus containment measures like travel bans would dampen demand, crude posted its biggest one-day drop since April 2020.
A senior economist at Nomura Securities, Tatsufumi Okoshi commented that they saw some correction as Friday’s plunge in oil prices has been overdone.
While another, Jeffrey Halley of brokerage OANDA also commented that they can’t help but feel that Friday’s lows were probably the bargain of the year if traders were an oil buyer, be it speculative or physical.
On Monday, the Japanese government announced that it would close its borders to foreigners, as the country joined Israel in taking the toughest measures against the new South African variant Omicron.
According to reports, the emergence of Omicron has created a new challenge for the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+. The member countries are due to meet this week to set policy.
The group in order to gain time to assess Omicron’s impact on demand has postponed technical meetings this week. However, Russia mentioned that it sees no need for urgent action on the market, downplaying the possibility of changes to the OPEC+ oil deal.
This week, on Monday, the oil market’s radar will be on talks on reviving the 2015 Iran nuclear accord, which could add to global supply if a deal is reached.