Following one of the biggest daily collapses in the past two decades at the end of November, oil prices have rebounded in recent days in a mini relief rally and were headed early on Friday to their largest weekly gain since August.
As of 9:24 a.m. EST on Friday, WTI Crude was up 1.23% at $71.83 and Brent Crude was trading up 1.01% at $75.20, after fears of a severe impact of the Omicron COVID variant on oil demand started to ease this week.
On November 26, oil prices crashed by more than 10%, with the front-month futures price for Brent Crude collapsing by $9.50 per barrel, or nearly 12%, after the World Health Organization (WHO) designated Omicron as a “variant of concern.”
Daily Brent crude oil prices have fallen by at least 10% on only 8 days since 2000, the U.S. Energy Information Administration (EIA) said in an analysis on Friday.
In the 5,629 trading days since the start of 2000, Brent Crude prices remained within 2% of the previous day’s value 72% of the time. This year, before the November 26 price drop, the most the Brent crude oil price decreased in a single day was 6.9%, on March 18, according to data compiled by the EIA.
Panic over whether the still little-researched new variant will escape vaccine protection led to a crash on all markets on November 26, the day after Thanksgiving, and crude oil led the plunge as countries started to announce bans on flights from African countries. The low liquidity on the oil market in the festive period in the U.S. also contributed to the collapse in prices, which was the largest one-day crash since April 2020.
In the following two weeks, fears have subsided, and Pfizer and BioNTech said this week their booster shot promises to be effective against the Omicron variant. Although it’s early days to draw conclusions of how effective vaccines would be to protect against Omicron, scientists are also encouraged by early reports that symptoms of the new variant are mild.
By Tsvetana Paraskova for Oilprice.com
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