- Oil prices are choppy on Wednesday amid conflicting headlines on vaccine efficacy and worries about tighter Covid-19 curbs.
- But oil prices remain significantly higher on the week amid optimism that Omicron will be mild.
Oil prices have been choppier on Wednesday than the previous two days. Front-month WTI futures have undulated within a $71.00-$72.70ish range over the past few hours, swinging between gains and losses. The most recent uptick in volatility at the time of the CME oil pit open at 1400GMT (when volumes typically surge) saw WTI slump back under the $72.00 to around $71.75, where it trades broadly flat on the day. But the week, WTI continues to trade with gains of more than $5.0 (nearly 8.0%) and the gains versus last week’s near-$62.00 lows now stand at over $9.00 or nearly15%.
Oil markets have been driven higher this week by hopes that the new Omicron Covid-19 variant is milder than prior variants, thus presenting less of a threat to the global economic recovery. Headlines regarding the efficacy of vaccines has been mixed over the last 24 or so hours. Late on Tuesday, a study was released by scientists in South Africa showing that two doses of the Pfizer/BioNTech vaccine were only partially able to neutralise Omicron. However, Pfizer and BioNTech released a separate study this morning which essentially suggested that a third booster dose would restore vaccine efficacy back in line with the efficacy that two doses had against prior Covid-19 strains.
Risk appetite and crude oil markets have been choppy as a result of the conflicting stories, whilst oil markets have also taken notice of headlines in the UK suggesting that new Covid-19 curbs are on the verge of being introduced. One of them will include the recommendation to work from home, which of course dampens the near-term outlook for demand for fuel in the UK if fewer people are travelling. The UK doesn’t make up a large enough portion of daily global crude oil consumption for this to really matter, but the fear is that states in the oil guzzlings US may follow suit.
Looking ahead, oil traders will be watching the release of official weekly US inventory numbers at 1530GMT. Private weekly US inventory data showed a slightly larger than expected draw in crude oil stocks of around 3.1M barrels.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD clings to recovery gains near 1.0850 ahead of Fedspeak
EUR/USD trades in positive territory near 1.0850 on Friday following a four-day slide. China's stimulus optimism and a broad US Dollar correction help the pair retrace the dovish ECB decision-induced decline. All eyes remain on the Fedspeak.
GBP/USD pares UK data-led gains at around 1.3050
GBP/USD is trading at around 1.3050 in the second half of the day on Friday, supported by upbeat UK Retail Sales data and a pullback seen in the US Dollar. Later in the day, comments from Federal Reserve officials will be scrutinized by market participants.
Gold at new record peaks above $2,700 on increased prospects of global easing
Gold (XAU/USD) establishes a foothold above the $2,700 psychological level on Friday after piercing through above this level on the previous day, setting yet another fresh all-time high. Growing prospects of a globally low interest rate environment boost the yellow metal.
Crypto ETF adoption should pick up pace despite slow start, analysts say
Big institutional investors are still wary of allocating funds in Bitcoin spot ETFs, delaying adoption by traditional investors. Demand is expected to increase in the mid-term once institutions open the gates to the crypto asset class.
Canada debates whether to supersize rate cuts
A fourth consecutive Bank of Canada rate cut is expected, but the market senses it will accelerate the move towards neutral policy rates with a 50bp step change. Inflation is finally below target and unemployment is trending higher, but the economy is still growing.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.