By Peter Nurse
Investing.com -- Oil prices rose Friday, on track to record their best week since late August, amid growing optimism that the spread of the Omicron Covid variant won’t cause severe economic damage.
By 9:25 AM ET (1425 GMT), U.S. crude futures traded 0.8% higher at $71.53 a barrel, while the Brent contract rose 0.7% to $74.93. Both benchmarks were set for gains of more than 7% this week, their first weekly gain in seven.
U.S. Gasoline RBOB Futures were up 0.3% at $2.1356 a gallon.
The crude market has bounced back strongly as early studies have shown that the Omicron variant, while highly transmissible, is less dangerous for those infected than previous strains.
Additionally, drug companies have indicated that their vaccines will largely fight off the variant if people have three doses through the booster programs, suggesting the hit to demand from the mobility restrictions in place to curb its spread may be relatively minor.
“Oil prices have been slowly rising since investors exaggerated the Omicron news, causing a 16% drop in oil prices,” said Naeem Aslam, chief market analyst at AvaTrade. “Brent … has risen 9% since Dec. 1, indicating that oil demand is unlikely to reduce in the near future. Even the airline industry, which is generally the most affected by new versions, has seen just a little reduction in seating capacity.”
This positive tone has managed to survive a strong U.S. inflation release, as the November consumer price index rose 0.8% last month, rising 6.8% year on year, the biggest year-on-year rise since June 1982 and followed a 6.2% advance in October.
This puts the focus on next week’s Federal Reserve policy-setting meeting, with the U.S. central bank widely expected to acknowledge surging inflation by speeding up the tapering of its bond-buying program, potentially lifting the dollar to the likely detriment of commodity prices.
Oil typically falls when the dollar firms because it makes oil more expensive for buyers holding other currencies.
Data detailing the Baker Hughes' rig count and CFTC positioning are due later, and round off the week.