Crude Oil Higher – Caution Remains Despite Improved Risk Appetite

Oil prices pushed higher Tuesday, helped by an improvement in risk appetite, but a degree of caution remains given the rapid spread of Covid cases around the globe, led by the Omicron variant.

By 9:10 AM ET (1410 GMT), U.S. crude futures traded 2.5% higher at $70.33 a barrel, and the Brent contract rose 2.3% to $73.13.

U.S. Gasoline RBOB Futures were up 2.1% at $2.1336 a gallon.

Helping the tone Tuesday was the news from Moderna that the U.S. drugmaker could develop a booster shot to protect against the Omicron variant in a relatively short period.

Additionally, the sight of power stations in Europe starting up their fuel oil-burning units for the first time in years as freezing weather sets in boosted sentiment.

Energy prices have spiraled this year, with European gas surging more than 600% as Russia limited natural gas flows through a major transit route to Germany. The route is set to be only partially used in January.

However, these gains could be short-lived as Omicron infections are multiplying rapidly across Europe, the United States and Asia, prompting many countries, particularly across Europe, to consider new restrictions on movement during the financially-important festive period.

“It also looks increasingly likely that the U.K. will reimpose restrictions sometime after Boxing Day (Dec. 26), with daily cases moving to record highs,” analysts said in a note.

Investors now await U.S. crude oil supply data from the American Petroleum Institute, due later in the day, as a gauge of demand in America, the largest consumer of crude in the world.

The industry body estimated that crude stockpiles fell 815,000 barrels for the week ended Dec. 10, while the official government inventory report showed a draw of over 4.5 million barrels.

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