By Barani Krishnan
Investing.com - Oil prices posted their first weekly gain after six in the red, with analysts warning of more volatility as the market tries to manage downward pressure from Omicron-related news and rate hike fears amid optimism about energy use in the coming quarter.
West Texas Intermediate, the benchmark for U.S. crude, settled up 73 cents, or 1%, at $71.67 a barrel. For the week, WTI gained 8.1%. Last week, it hit a four-month low of $62.48 last week on Omicron-related fears, after a seven-year high of $85.41 in mid October.
London-traded Brent, the global benchmark for oil, was up 82 cents, or 1.1% by 2:40 PM ET (19:40 GMT). For the week, Brent showed a gain of 7.7%. Brent fell to $65.80 last week, from a 2014 high of $86.70 in mid-October.
“Omicron is still a major risk factor,” Phil Flynn, analyst at Chicago’s Price Futures Group and an avowed oil bull, said as crude prices showed a gain of around 7% on the week after losing some 20% over six previous weeks.
On the same note, Flynn pointed to a Bloomberg story that passenger vehicle traffic levels on U.S. interstate highways were back to pre-Covid levels, with miles driven up 0.3% on a four-week rolling average, the first positive rate since March 2020. “Omicron may – or may not – change the trend,” Flynn said, referring to a quote in that story
Almost 80% of the 40-odd Omicron cases reported in the United States were among the fully vaccinated, with a third of them even having received a booster dose, the U.S. Centers for Disease Control and Prevention said on Thursday, further complicating efforts to counter the latest Covid variant.
Global health experts, including top U.S. virologist and White House adviser Dr. Anthony Fauci, say the effects of the Omicron appeared to be less severe than initially thought. Pfizer (NYSE:PFE) and its partner BioNTech have also said three doses of their vaccine could neutralize the variant.
But news on Thursday also showed the Omicron was 4.2 times more transmissible than Covid’s Delta variant, which led to a resurgence in hospitalization and deaths around the world. What’s not known is the fatality rate of the new strain, though its spread rate was enough to stoke fear.
The virus aside, fears that the Federal Reserve might embark on a rate hike by the first quarter of next year versus mid- or late 2022 was also weighing across financial markets, including the energy sector.
U.S. consumer prices were up 6.8% in the year to November, keeping with their frenetic growth after the fastest expansion in almost four decades a month earlier, the Labor Department announced on Friday.
The Federal Reserve is closely watching numbers on U.S. inflation and employment, among others, to determine the timing for the first post-pandemic rate hike. The central bank kept rates unchanged at between zero and 0.25% since the Covid-19 outbreak in March 2020.
U.S. jobless claims, meanwhile, came in at 184,000 last week, the lowest in more than 50 years, as the employment market resumed its dynamic recovery from the pandemic, Labor Department data showed.