Oil prices steadied near $75 a barrel today, taking a breather after strong gains earlier this week, as investors continued to assess the impact of the Omicron coronavirus variant on the global economy and fuel demand.
Brent crude futures dropped 19 cents, or 0.25%, to $75.25 a barrel this morning, after settling 3.2% higher yesterday.
US West Texas Intermediate crude was at $71.78 a barrel, down 27 cents or 0.4%, having gained 3.7% in the previous session.
After dropping by over 16% since November 25 to around $69 a barrel, Brent crude prices rebounded by nearly 10% since December 1 on signs Omicron has had only a limited impact on oil demand so far.
"Around two thirds of the previous price slide (has) been corrected, a downswing that had been brought about by demand concerns sparked by the new Omicron variant. These now appear to be exaggerated," Commerzbank said.
"There has been no noticeable slowing effect on oil demand as yet. Even aviation, the sector that should have been hit first, has seen only a marginal decrease in seating capacity," it added.
The Omicron variant has been reported in 57 nations, with Covid cases rising in southern Africa including Zimbabwe, and the number of patients needing hospitalisation is likely to rise as it spreads, the World Health Organization said today.
The market was also focused on rising geopolitical tensions as talks between Washington and Tehran over Iran's nuclear programme were set to resume this week as Western officials voiced dismay at sweeping Iranian demands.
An easing of US sanctions is expected to lead to higher exports of Iranian oil, which could add downward pressure on oil prices.
Meanwhile, tensions between Western powers and Russia over Ukraine also remained high after President Joe Biden warned Russian President Vladimir Putin that the West would impose "strong economic and other measures" on Russia if it invades Ukraine, while Putin demanded guarantees that NATO would not expand farther eastward.
Oil markets reacted little to US weekly inventory data.
US crude stocks fell last week while gasoline and distillate inventories rose, according to market sources citing American Petroleum Institute figures yesterday.
Analysts polled by Reuters forecast US crude inventory data would show a second weekly decline in a row.