London : Oil rose more than 5% to above $76 a barrel on Monday as some investors viewed the downturn in oil and financial markets as overdone on Friday while the world awaits more data on the Omicron coronavirus pandemic.
Top officials from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, echoed that view, with the Saudi energy minister saying he was not concerned about the Omicron version.
The World Health Organization has said it could take weeks to understand the severity of the variant, although a South African doctor who treated the cases said symptoms seemed mild so far.
Brent crude was up $3.66, or 5%, at $76.38 a barrel by 1444 GMT, having fallen $9.50 on Friday. US West Texas Intermediate (WTI) crude was up $4.36, or 6.4%, at $72.51, having fallen at $10.24 in the previous session.
“We saw some correction as oil prices ended Friday’s decline,” said Tatsufumi Okoshi, senior economist at Nomura Securities.
Friday’s slide, the biggest one-day drop since April 2020, reflected fears that travel restrictions would hit demand. Analysts said the decline was accelerated by lower liquidity on account of the US holiday and the expected fall in demand does not justify such a fall.
“Fears hit the financial markets on Friday,” said Norbert Rucker of Swiss bank Julius Baer. “Fundamentally, the international air travel barriers announced and enacted cannot explain such a sharp slowdown.”
On Monday, calm returned to the broader markets as investors awaited more details on the new version. European and Wall Street stocks rose, while safe-haven bonds lost ground.
“I couldn’t help but think Friday’s lows were probably the deal of the year, if you were an oil buyer, speculative or physical,” said Jeffrey Haley of brokerage OANDA.
Omicron poses a new challenge to OPEC+, which meets on December 2 to discuss whether to move forward with January’s scheduled increase in oil production. OPEC+ postponed technical meetings this week to allow time to assess the impact of Omicron.
Saudi Energy Minister Prince Abdulaziz bin Salman al-Saud said on Monday he was not concerned about Omicron, Ashrak Business reported, while his Russian counterpart said he saw no need for immediate action on the market.
Also on the radar of the oil market this week, talks on reviving the 2015 Iran nuclear deal, which could boost global supplies if a deal is reached, will resume on Monday.
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