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Oil continues gain despite Omicron measures after US inventories fell beyond forecast

Crude prices continue upward even though various governments have imposed a series of restrictions to contain the spread of Omicron. US inventories also depleted more than projected last week, EIA informs.

Photo: Dado Ruvic/REUTERS / X02714

Oil prices maintain upward momentum for the third day in a row on Thursday, supported by a weaker US dollar, attributed to optimism about global economic growth yet despite several countries imposing restrictions to halt the spread on Covid-19 variant Omicron, reports Reuters.

A barrel of European reference oil Brent trades for USD 75.49 Thursday morning against USD 74.44 Wednesday afternoon. US benchmark crude West Texas Intermediate sells at the same times for USD 72.96 against USD 71.73.

A weaker US dollar strengthens oil markets because buying the commodity becomes cheaper for holders of other currencies. The dollar hit its weakest level in a week after data on Wednesday showed that US consumer confidence has increased more than expected in December.

Oil's gains have taken place despite various national governments, including those of popular travel destinations, introducing numerous restrictions to contain the spread of Omicrom.

The market has ignored the potential effect of limited mobility on fuel demand because the Organization of Petroleum Exporting Countries and its OPEC+ allies, which include Russia, are keeping the door ajar for revising plans to boost output quotas by 400,000 barrels of oil per day in January.

“The Omicron variant could still lead to more restrictive measures across Europe and Asia, but prices won’t break since OPEC+ can easily adjust their production levels,” says OANDA analyst Edward Moya in a note, as cited by the news agency.

US stockpiles fell beyond forecast

Crude inventories in the US decreased last week with 4.7 million barrels, shows an update from the country's Energy Information Administration.

Analysts had otherwise forecast a decline of 2.8 million barrels, writes Direkt referencing a consensus prognosis compiled by Trading Economics.

Gasoline stockpiles, on the other hand, surged with 5.5 million barrels against the outlook of 0.5 million barrels.

English Edit: Daniel Frank Christensen

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