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Oil prices ease, focus shifts to next OPEC+ move

Oil prices keep climbing even as Omicron COVID-19 variant fans out
Oil prices keep climbing even as Omicron COVID-19 variant fans out   -   Copyright  Thomson Reuters 2021   -  
By Reuters

<div> <p>By Ahmad Ghaddar</p> <p><span class="caps">LONDON</span> -Brent crude futures snapped a three-day rally on Friday in light trading before the Christmas holidays, but the benchmark ended the week higher, with the market focusing on next steps by <span class="caps">OPEC</span>+ and the impact of the Omicron variant.</p> <p>Brent crude futures settled 71 cents lower at $76.14 a barrel at the early close of 1300 <span class="caps">GMT</span>, rising by about 3% on the week.</p> <p>U.S. markets are closed on Friday for the Christmas holiday.</p> <p>Oil prices have recovered this week as fears over the impact of the highly infectious Omicron variant on the global economy receded, with early data suggesting it causes a milder level of illness.</p> <p>“The omicron-is-mild rally could well continue into January now, but reality will bite in February I believe, as the end of the Fed taper moves into sight,” <span class="caps">OANDA</span> analyst Jeffrey Halley said. </p> <p>The U.S. Federal Reserve said last week it would end its pandemic-era bond purchases in March, paving the way for three interest rate increases that most Fed policymakers now believe will be needed next year.</p> <p>The Organization of the Petroleum Exporting Countries and allies including Russia, known as <span class="caps">OPEC</span>+, will meet on 4 January to decide whether to go ahead with a 400,000 barrels per day (bpd) production increase in February.</p> <p>Russia believes oil prices are unlikely to change significantly next year with demand recovering to pre-pandemic levels only by the end of 2022, Deputy Prime Minister Alexander Novak said on Friday.</p> <p>Some investors remained cautious amid surging infection cases.</p> <p>Omicron advanced across the world on Thursday, with health experts warning the battle against the <span class="caps">COVID</span>-19 variant was far from over despite two drugmakers saying their vaccines protected against it and despite signs it carried a lower risk of hospitalisation.</p> <p>Coronavirus infections have soared wherever the variant has spread, triggering new restrictions in many countries, including Italy and Greece, and record numbers of new cases.</p> <p>Global oil demand roared back in 2021 as the world began to recover from the coronavirus pandemic, and overall world consumption potentially could hit a new record in 2022 – despite efforts to bring down fossil fuel consumption to mitigate climate change.</p> </div>