Oil prices on track for biggest weekly gain since August

[NEW YORK] Oil prices rose on Friday (Dec 10) slightly and were on track for their biggest weekly gain since late August, with market sentiment buoyed by easing concerns over the Omicron coronavirus variant's impact on global economic growth and fuel demand.

The Brent and US West Texas Intermediate (WTI) crude benchmarks were both on course for gains of about 8 per cent this week, their first weekly gain in 7, even after a brief bout of profit-taking.

Brent futures were up 42 US cents or 0.6 per cent at US$74.85 a barrel by 2.06 pm Eastern (5.06 pm GMT) after falling 1.9 per cent on Thursday (Dec 9).

WTI rose 43 US cents or 0.6 per cent to US$71.37 after sliding 2 per cent in a volatile session the previous day.

"Oil traders are coming out of their shell-shock and feeling more bullish as they recalibrate their demand expectations in the aftermath of the Omicron variation of the coronavirus," said Phil Flynn, senior analyst price futures group in Chicago.

US consumer prices rose further in November to produce the largest year-on-year rise since 1982, government data showed, adding to bullish sentiment on oil demand.

Earlier in the week the oil market had recovered about half the losses suffered since the Omicron outbreak on Nov 25, with prices lifted by early studies suggesting that 3 doses of Pfizer's Covid-19 vaccine offers protection against the Omicron variant.

"The oil market has thus rightly priced out the 'worst-case scenario' again, but it would be well advised to leave a certain residual risk to oil demand in place," said Commerzbank analyst Carsten Fritsch.

Keeping a lid on prices are faltering domestic air traffic in China, owing to tighter travel restrictions, and weaker consumer confidence after repeated small outbreaks.

Meanwhile, ratings agency Fitch downgraded property developers China Evergrande Group and Kaisa Group, saying they had defaulted on offshore bonds.

That reinforced fears of a potential slowdown in China's property sector, as well as the broader economy of the world's biggest oil importer.

REUTERS