Brent crude futures snap 3-day rally in thin trade; Omicron eyed

TOKYO: Oil prices fell on Friday in thin, holiday trade after a three-day rally, with investors trying to gauge the Omicron coronavirus variant’s impact on demand.

Brent crude futures slid 29 cents, or 0.4%, to $76.56 a barrel by 0205 GMT, following a 2.1% gain in the previous session. The benchmark was still on track for a weekly gain of about 4%.

U.S. markets are closed on Friday for the Christmas holiday.

prices have recovered this week as fears over the impact of the highly infectious Omicron variant on the global economy receded, with early data suggesting it causes a milder level of illness.

“But investors remained cautious amid surging infection cases,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

Omicron advanced across the world on Thursday, with health experts warning the battle against the COVID-19 variant was far from over despite two drugmakers saying their vaccines protected against it and despite signs it carried a lower risk of hospitalisation.

Coronavirus infections have soared wherever the variant has spread, triggering new restrictions in many countries including Italy and Greece and record new cases.

United Airlines and Delta Air Lines said on Thursday they had each cancelled dozens of Christmas Eve flights, as the spreading Omicron variant takes a toll on its flight crews and other workers.

“Still, given the soaring natural gas prices in Europe and Asia, oil will likely keep a positive tone on expectations that some industries would switch fuel from high priced gas to oil,” Kikukawa said.

Asian liquefied natural gas (LNG) prices jumped this week, despite tepid Asian demand, as upside risk in the European gas market remains a key driver directing price movement.

A higher U.S. rig count also added to pressure on the oil market.

Operating U.S. oil and gas rigs rose to their highest levels since April 2020 in the most recent week, according to energy services firm Baker Hughes. Overall counts are now at 586, portending a boost in output in coming months.

Four people were injured at a fire at Exxon Mobil’s Baytown refinery, one of the largest in the United States. The fire is out, and the refinery is adjusting production at the facility, which has the ability to process up to 560,000 barrels per day.