(Bloomberg) — Oil flipped between gains and losses following Monday’s broader market selloff as investors assessed the outlook for demand amid the rapid spread of omicron.
Futures in London traded below $72 a barrel on Tuesday after falling about 5% over the past two days. The new virus variant accounted for 73% of all Covid-19 infections in the U.S. last week, but there’s still little sign of a substantial hit to oil consumption.
Crude’s rebound from the pandemic has faltered toward the end of the year, in part due to the emergence of the new Covid-19 strain ahead of winter. The oil market structure is flashing bearish signs, indicating near-term over-supply, which may require OPEC+ to act when the group meets next month.
“Crude oil trades mixed with omicron-related demand worries the key driver of the recent weakness,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S.
While oil bounced between gains and losses, power and gas prices in Europe once again surged higher. Benchmark European power prices hit a record, while gas jumped by more than 5%. Earlier this year, crude was boosted by expectations that there would be a major switch in power consumption toward crude and petroleum products.
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The rout across financial markets on Monday was exacerbated by Senator Joe Manchin’s rejection of President Joe Biden’s roughly $2 trillion package. The president spoke to Manchin on Sunday, a conversation that the White House believes left the door open to revive talks on the spending plan, according to a person familiar with the matter.
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