Omicron Casts Uncertainty Over Markets
December 6, 2021
The Omicron variant has put uncertainty into the energy markets, but it now appears that most traders seem to think its impact on demand may be minor and the demand recovery will begin again. Saudi Arabia raised the selling price for oil shipped to Asia and the US, a move many see as confidence that Omicron will not have a big impact on demand.
Energy prices are higher this morning in early trading as we start this new week.
Iran nuclear talks have also soured and that means the optimism that Iran barrels could be coming back to the market now look less likely.
US commercial crude oil inventories decreased by 900,000 barrels week over week and sit a 6% below the five-year average. Gasoline inventories increased by 4 million barrels week over week and are 5% below the five-year average. Distillate inventories increased by 2.2 million barrels week over week and are 9% below the five-year average. Propane inventories decreased by 1 million barrels week over week and are 14% below the five-year.
Morgan Stanley analysts said OPEC+ decision softened its estimated oil market balances for the first half of 2022 but said the market will likely return to undersupply and inventory draws from mid-2022 onwards.
US rig count from Baker Hughes was unchanged this past week as no new oil rigs were added.