WTI Back Above USD 76.00 As Traders Eying Omicron Risk

WTI trades above USD 76.00, supported as Omicron pessimism is in focus during Tuesday’s US session and amid supply outages.

WTI only trades about USD 2.0 below pre-Omicron levels above USD 78.00, suggesting fears of economic disruption have generally been assessed.

Oil prices have trimmed earlier gains with front-month WTI futures currently trading just above the USD 76.00 mark, after running into resistance at the 50-day moving average at USD 76.66 and at the USD 77.00 level earlier in the session. WTI continues to trade with substantial gains on the week of nearly USD 2.50 (over 3.0%), after surging above resistance in the USD 74.00 and USD 75.00 areas on Monday.

Crude oil prices have been moving higher in recent sessions in tandem with global stock markets and other risk assets as traders continue to price out Omicron-related pessimism. Studies last week showed infection with the new Covid-19 variant to be comparatively mild, thus reducing the pressure on governments to implement economically harmful lockdowns and oil-demand destroying travel restrictions.

Traders have also been citing supply disruptions in the likes of Ecuador, Libya and Nigeria as positive for oil prices this week, with producers in each of these nations declaring force majeure amid problems with maintenance and other issues.

Coming up, US weekly private crude oil inventory numbers are out ahead of the official EIA release at on Wednesday.

A poll released by Reuters showed that inventories are expected to post a fifth successive draw (of slightly over 3.2M barrels). Beyond that, the next OPEC+ meeting on 4 January is fast approaching and traders will be on the lookout for any commentary from oil ministers/insight from inside sources.