Oil prices fell sharply as news of the appearance of the first case of Omicron in the US dimmed market risk appetite.
Crude oil prices slumped again due to fading risk sentiment over the emergence of the first case of Omicron COVID in the United States. At the time this news was written on Thursday morning (02/December), oil started to correct from yesterday's close. Brent oil prices were at around $69.98 per barrel, while WTI oil was trading at around $66.49 per barrel.
The United States yesterday confirmed cases of COVID Omicron for the first time since the variant was discovered in Africa last week. The patient is said to have been fully vaccinated and infected after returning from South Africa. The emergence of vaccine-resistant variants of the Corona virus certainly raises energy market concerns. The reason is, it is possible that the Omicron variant could spread globally and suppress oil demand because many countries have imposed travel restrictions.
"We don't have much information on the nature of the Omicron COVID virus yet. It's unclear how easy the transmission rate of this variant is and whether the available vaccines are effective… This has led to many changes in market sentiment," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder.
US plans to stabilize prices
Separately, the US is reviewing new steps by adjusting the timing of the release of oil stocks to anticipate the risk of falling prices due to the presence of Omicron. "The Biden administration has flexibility over the timing of the release of reserves in the event that global energy prices fall substantially," said US Undersecretary of Energy David Turk.
Turk added that other consuming countries such as China and Japan have agreed to release oil reserves to tame its price and can adjust the release time freely if needed. "I think each country will make decisions based on what is useful to their domestic consumers and work to stabilize prices," added Turk.
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