Oil set for biggest weekly gain since August

London — Oil prices were on track for their biggest weekly gain since late August, with market sentiment buoyed by easing concerns over the Omicron coronavirus variant’s impact on global economic growth and fuel demand.

The Brent and WTI benchmarks were both on course for gains of about 7% this week, their first weekly gain in seven weeks, even after a brief bout of profit-taking.

Brent crude futures were up 0.2%, or 11c, at $74.53 a barrel by 9.27am GMT after falling 1.9% on Thursday.

US West Texas Intermediate (WTI) crude futures rose 27c, or 0.4%, to $71.21 after sliding 2% in a volatile session the previous day.

Earlier in the week the oil market had recovered about half the losses suffered since the Omicron outbreak on November 25, with prices lifted by early studies suggesting that three doses of Pfizer’s Covid-19 vaccine offers protection against the Omicron variant.

However, prices pressure is being applied by faltering domestic air traffic in China, owing to tighter travel restrictions, and weaker consumer confidence after repeated small outbreaks.

Meanwhile, ratings agency Fitch downgraded property developers China Evergrande Group and Kaisa Group, saying they had defaulted on offshore bonds.

That reinforced fears of a potential slowdown in China’s property sector, as well as the broader economy of the world’s biggest oil importer.

In addition, headlines about a Japanese study showing Omicron is more than four times as transmissible as the Delta variant also sparked some selling, Oanda analyst Jeffrey Halley said.

“Oil’s had a massive run — it was an excuse for some of the short-term money to lock in some profits,” Halley said.

A stronger dollar, rising ahead of US inflation data due later on Friday, also weighed on oil prices. Oil typically falls when the dollar firms because it makes oil more expensive for buyers holding other currencies.

Reuters