Oil rebounds after rout as traders size up threat from omicron

Oil rebounds after rout as traders size up threat from omicron

Oil rebounded from Friday’s omicron-driven rout as traders assessed the risks to global demand from the new variant, and speculation mounted that OPEC+ may decide this week to pause output increases.

Brent rallied, climbing along with West Texas Intermediate, after the global benchmark posted the seventh largest ever dive in last week’s final session. Crude, however, pared some of its gains as Japan said it would ban the entry of foreign visitors due to concern over the new Covid-19 strain. With cases seen from Hong Kong to Canada, the World Health Organisation said that understanding the variant will take days to several weeks.

Oil has slumped since hitting a multi-year peak in late October as leading consumers including the US announced releases of crude from strategic stockpiles to combat rising prices. The sell-off deepened late last week with the emergence of omicron, which prompted governments to embark on a slew of measures to contain the new challenge, including bans on flights. Goldman Sachs Group Inc. said the magnitude of oil’s drop seemed “excessive”.