Futures Movers: U.S. oil extends rally above $70, aims for 2-week high


Crude-oil futures climbed on Tuesday, with U.S. prices up a second straight session and eyeing its highest value in about two weeks, as fears eased that the coronavirus omicron variant may reduce demand over the winter.

The market seems to have found some support “on speculation that COVID’s omicron variant could have a more mild impact than initially feared,” said Robbie Fraser, global research & analytics manager at Schneider Electric, in a daily note.

West Texas Intermediate crude for January delivery CLF22, +3.86%   CL.1, +3.86%  picked up $2.49, or 3.6%, to reach $71.98 a barrel on the New York Mercantile Exchange, following a 4.9% advance on Monday. If WTI, the U.S. benchmark, settled at the current level it would mark its highest value since Nov. 24, a day before omicron variant’s emergence prompted a sharp drop in stocks and commodity prices.

February Brent crude BRNG22, +3.16%   BRN00, +3.16%, the global benchmark, was trading $2.28, or 3.1%, higher at $75.36 a barrel on ICE Futures Europe, and heading for a fourth straight gain, with the contract headed for the highest finish since Nov. 25, if values hold through settlement.

Gains for crude have been aided by a confluence of factors, including stalled nuclear disarmament talks between Iran and other Western countries, reducing the chance of Iranian crude returning to the market, while fears about the omicron variant also subsided.

The outlook for oil demand has “returned to being positive, while oil supply remains tight as economies recuperate from the rock bottom situation witnessed in 2020,” said Naeem Aslam, chief market analyst at AvaTrade.

The argument for a strong future outlook for oil demand is supported by Saudi Arabia’s decision to raise prices for crude oil it sells to Asia and the U.S., and OPEC+’s judgment to stick to its plan of pumping 400,000 barrels a day into the markets in January as well, said Aslam, in a market update.

In addition, China’s imports increased 31.7% on year in November, while its exports gained 22%. Data showed that imports of oil from the world’s largest crude importer rose 14.3% to 10.17 million barrels per day in November, up from 8.9 million bpd in the month before, although still below the 11.04 million bpd from the same period last year.

Traders will get an update on U.S. petroleum supplies from the Energy Information Administration early Wednesday. The American Petroleum Institute will release its own data ahead of that late Tuesday.

On average, analysts expected the EIA to report a drawdown of 1.2 million barrels in U.S. crude stockpiles for the week ended Dec. 3, according to a survey conducted by S&P Global Platts. They also forecast U.S. supply increases of 1.4 million barrels for gasoline and 900,000 barrels for distillates.

On Nymex Tuesday, January gasoline RBF22, +2.73% tacked on 2.4% to $2.094 a gallon and January heating oil HOF22, +2.11% added 2.1% to $2.215 a gallon.

Natural gas for January delivery NGF22, +3.14% traded at $3.753 per million British thermal units, up 2.6%, after forecasts for milder U.S. weather prompted a more than 11% drop on Monday.

This article was originally published by Marketwatch.com. Read the original article here.

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