Oil rises to $76 on speculation of Omicron drop, surpassed by Reuters

© Reuters. FILE PHOTO: A poster reads crude oil on the side of a tank in the Permian Basin in Menton, Loving County, Texas, United States, November 22, 2019. REUTERS/Angus Mordant

By Alex Lawler

LONDON (Reuters) – Oil rebounded about 5% on Monday to $76 a barrel, as some investors considered the decline in oil and financial markets on Friday amid concerns about the Corona virus variable, Omicron, as exaggerated.

While the World Health Organization warned that understanding the severity of the variant could take a long time, a South African doctor who treated the cases said the variant’s symptoms had so far been mild.

It was $3.41, or 4.7%, up at $76.13 by 0920 GMT, after falling $9.50 on Friday. US West Texas Intermediate crude rose $3.07, or 4.5 percent, to $71.22, after falling $10.24 in the previous session.

“We saw some correction as Friday’s drop in oil prices was offset,” said Tatsufumi Okoshi, chief economist at Nomura Securities.

European stocks also rebounded on Monday, while safe haven bonds lost steam. Crude oil posted its biggest one-day drop since April 2020 on Friday as investors fear virus containment measures such as travel bans will dampen demand.

“I can’t help but feel that Friday’s lows were probably the bargain of the year if you’re a buyer of oil, whether you’re speculative or physical,” said Jeffrey Haley of brokerage OANDA.

Japan said on Monday it would close its borders to foreigners, as the world’s third-largest economy joined Israel in taking the toughest measures against the alternative.

The emergence of Omicron has created a new challenge for the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, who are due to meet this week to set policy.

The group postponed its technical meetings this week to buy time to assess the impact of Omicron on demand, but Russia said it did not see the need for urgent action in the market, reducing the likelihood of changes to the OPEC + oil agreement.

Also on the oil market’s radar this week, talks will resume on Monday on reviving the 2015 Iran nuclear deal, which could boost global supplies if a deal is reached.

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