By Barani Krishnan
Investing.com - Oil prices rose 4% in a second straight session on Tuesday as risk-takers across markets abandoned all caution over the Omicron variant of the coronavirus.
“We're seeing improvements in risk appetite again on Tuesday as fears around Omicron continue to ease following earlier reports of less severe symptoms,” said Craig Erlam, analyst at online trading platform OANDA.
WTI, or the West Texas Intermediate benchmark for U.S. crude, settled up $2.56, or 3.7%, at $72.05. On Monday, it rose 4.6%. WTI hit a four-month low of $62.48 last week on fears related to the Omicron, after a seven-year high of $85.41 in mid October.
London-traded Brent crude, the global benchmark for oil, finished the session up $2.36, or 3.2%, at $75.44. Brent gained 4.6% in the previous session. Last week, it fell to $65.80, from a 2014 high of $86.70 in mid-October.
Erlam said oil longs could run further with the rally before some real profit-taking sets in.
“We're already seeing a bit in WTI around $71.50 but could see more on approach to $75, while in Brent $76.50-77.50 is key,” he said. “Ultimately it comes down to the headlines though and if symptoms prove to be less severe, meaning fewer hospitalizations and fatalities than feared, there's no reason oil prices can head back towards the levels seen for much of November.”
Tuesday’s rally in oil came ahead of a weekly snapshot on U.S. crude, gasoline and distillate stockpiles due from the American Petroleum Institute. The API numbers, released each Tuesday after market settlement at 4:30 PM ET (20:30 GMT), are a precursor to official weekly inventory data due each Wednesday from the EIA, or U.S. Energy Information Administration.
Analysts tracked by Investing.com have forecast that U.S. crude inventories fell by 1.7 million barrels for the week ended Dec. 3, adding to the previous week’s decline of 910,000.
Gasoline inventories likely rose by 1.8 million barrels, on top of the increase of 4.03 million in the previous week, forecasts showed.
Stockpiles of distillates, which include diesel and heating oil, are expected to have grown by 1.57 million barrels, after the previous week’s gain of 2.16 million.