Oil prices extended gains on Tuesday from a near 5% rebound the day before as concerns about the impact of the Omicron coronavirus variant on global fuel demand eased and Iran nuclear talks stalled, delaying the return of Iranian crude.
Brent crude futures were up $1.66, or 2.3%, at $74.74 a barrel by 1005 GMT, after settling 4.6% higher on Monday. US West Texas Intermediate crude was at $71.30 a barrel, up $1.81, or 2.6%, building on a 4.9% gain in the previous session.
Oil prices were pummelled last week by concerns that vaccines might be less effective against Omicron, sparking fears that governments may re-impose restrictions to curb its spread and hit global growth and oil demand.
However, a South African health official reported over the weekend that Omicron cases there had only shown mild symptoms. Also, the top US infectious disease official, Anthony Fauci, has told CNN “it does not look like there’s a great degree of severity” so far.
“The Fauci comments overnight saw more fast money returning to the long oil trade as markets started pricing a resumption of the global recovery and higher oil consumption,” said Jeffrey Halley, senior market analyst at OANDA.
In another sign of confidence in oil demand, the world’s top exporter Saudi Arabia raised monthly crude prices on Sunday.
That came after the Organisation of the Petroleum Exporting Countries and their allies, a group known as OPEC+, agreed to continue raising output by 400,000 barrels per day in January despite the release of US strategic petroleum reserves.
Crude imports to the world’s top importer China also rebounded in November, while a Reuters poll showed US crude inventories likely fell for a second straight week last week.
In addition, a delay in the return of Iranian oil supported prices. Indirect US-Iran nuclear talks have hit roadblocks. Germany urged Iran on Monday to present realistic proposals in talks over its nuclear programme.