(Bloomberg) — Oil extended gains — after its biggest weekly advance since late August — on more signs that omicron won’t be as bad as initially feared and predictions that China will soon start adding fiscal stimulus.
West Texas Intermediate futures climbed around 1% after gaining 8.2% in the first weekly increase since late October. The new coronavirus variant hasn’t had much impact on global oil demand, Iraq’s oil minister said Sunday.
Economists forecast that Beijing will start adding fiscal stimulus in early 2022 after the country’s top officials said their key goals for next year include stabilizing the economy. That should further improve sentiment in the market, given the Asian nation is the world’s biggest oil importer.
Oil has staged a partial turnaround — after tumbling into a bear market — on signs nervousness around omicron might have been overdone. However, there are also signs that demand might be weakening in the all-important Asian market, which may put downward pressure on prices.
See also: Doing Nothing Is the Best Oil Producers Can Do Now: Julian Lee
“The omicron fears are certainly continuing to shift away from the worst-case scenario,” said Vandana Hari, founder of Vanda Insights in Singapore. “The higher transmissibility is not in doubt but the worst-case fears of a spike in hospitalizations and deaths are certainly receding. Crude still has some more ground to reclaim.”
The first oil from President Joe Biden’s release from the country’s emergency crude reserves is being granted to Exxon Mobil Corp., which will receive 4.8 million barrels from the Strategic Petroleum Reserve as part of an exchange. The Energy Department also confirmed that it will issue a sale notice for 18 million barrels from the SPR on Dec. 17. The other five participating nations have yet to follow through on reserves sales, however.
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