Wednesday, 18 May, 2022
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Oil prices extend gains as worries over fuel demand recede

NEW YORK: Oil prices extended gains on Tuesday with prices trading near the previous day’s one-month high on hopes that the Omicron coronavirus variant will have a limited impact on fuel demand.

Brent crude rose 14 cents, or 0.1 per cent, to $78.74 a barrel, by 0437 GMT. U.S. West Texas Intermediate (WTI) crude rose 25 cents, or 0.3 per cent, to $75.81 a barrel, gaining for a fifth straight session, report agencies.

“Worries regarding Omicron are easing across the globe, resulting in some optimism over demand ... Prices are expected to trade with positive bias,” said Abhishek Chauhan, head of commodities at Swastika Investmart Ltd.

England will not get any new COVID-19 restrictions before the end of 2021, British health minister Sajid Javid said on Monday, as the government awaits more evidence on whether the health service can cope with high infection rates.

However, the upside to prices remained limited after more than 1,300 flights were cancelled by U.S. airlines on Sunday as COVID-19 reduced the number of available crews while several cruise ships had to cancel stops.

China’s local symptomatic coronavirus cases rose for a fourth consecutive day on Monday, with Xian reporting more infections in a flare-up that has put the city’s 13 million residents under lockdown.

Oil prices have risen around 50 per cent this year, supported by recovering demand and supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+.

“Volumes are thin because of holidays, and markets have already digested Omicron concerns. So, the focus is on the January 4 meeting of OPEC+,” Ajay Kedia, director at Kedia Commodities said.