(Bloomberg) — Oil steadied in New York after its biggest weekly jump in three months as traders weighed the risks from the omicron variant, while expectations of Chinese fiscal stimulus buoyed sentiment.
West Texas Intermediate futures traded near $72 a barrel, paring earlier gains as confidence that fuel consumption will withstand the new virus strain — which propelled crude 8.2% higher last week — fluctuated.
The U.K. said on Sunday it faces an emergency from omicron, and warned of possible new measures to contain it. Meanwhile, there have been some indications that high prices have sapped consumption in Asia.
“Risk-reward is not attractive, with the omicron spread in the initial phase,” said Helge Andre Martinsen, senior oil analyst at DNB Bank ASA in Oslo.
Prices drew some support from forecasts 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.
This month oil has staged a partial turnaround — after tumbling into a bear market at the end of November — on signs nervousness around omicron might have been overdone. Iraq’s oil minister said on Sunday that he doesn’t see any impact yet from the latest outbreak.
Still, traders are unsure how much scope there is for a further recovery with so much uncertainty in the outlook.
“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.”
See also: Doing Nothing Is the Best Oil Producers Can Do Now: Julian Lee
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