Brent crude futures stabilized around $75 per barrel on Friday after falling almost 2% in the previous session, as markets reassessed the demand outlook amid a lingering threat from the Omicron variant. Countries including the UK and China started implementing renewed restrictions as global infection cases rise. A study by a Japanese scientist found that the new variant is 4.2 times more transmissible than the delta, and has a higher chance of escaping immunity built naturally and through vaccines. Pfizer CEO Albert Bourla also said Wednesday that people might need a fourth shot sooner than expected after preliminary data showed the Omicron variant can undermine protective antibodies generated by its vaccine. Elsewhere, US inventory data also weighed on prices, as EIA data showed crude inventories fell by a modest 240,000 barrels in the previous week while stocks at Cushing rose by 2.37 million barrels, the largest increase since the week ended February 19th.
US natural gas futures firmed above $3.8 per million British thermal units, underpinned by higher European gas prices and a larger-than-expected draw in domestic inventories. Government data showed national natural gas stockpiles shrank by 59 bcf in the first week of the month, more than market expectations of a 54 bcf draw. Still, upward pressure remained weak compared to the 11.5% slump seen on December 6h after traders digested forecasts of mild weather for the third week of the month. Temperatures in the US have been warmer than usual throughout the winter heating season, raising concerns about heating needs. At the same time, natural gas inventories stood just 2% below normal levels before the start of the winter heating season, enough gas for the coming winter months. Since peaking at a 12-year high of $6.3 on October 5th, US natural gas futures have plunged more than 40% and diverged from the UK and the Dutch contracts, which continued to trade close to record highs.
US gasoline futures held to two-week highs above $2.1 per gallon after rallying more than 9% over three sessions in a row amid waning fears about the impact of the omicron coronavirus variant on fuel demand. Upbeat sentiment was fueled by news that three doses of Pfizer’s vaccine offered as much protection as two doses did against the delta variant. Additionally, Saudi Aramco raised crude prices bound to Asia and the US, signaling optimism about global oil demand days after the company’s CEO said markets had overreacted to the omicron scare. Still, a much larger than expected buildup in US gasoline stockpiles last week and expectations of an over-supplied oil market in early 2022 limited gains.
Heating oil futures extended gains past $2.2 per gallon, after hitting an over three-month low of $2.06 hit on the last day of November, as market concerns about the omicron variant eased. North America’s top infectious disease official Dr Anthony Fauci calmed fears saying the new strain didn’t seem to carry a great degree of severity, while data from South Africa didn’t point to any resurgence of hospitalizations linked to the omicron variant. Still, gains were capped by warmer-than-usual weather forecasts for the third week of December, a trend that has been unfolding since the beginning of the winter heating season in November.