Crude oil futures started the week mostly steady during mid-morning trade in Asia Jan. 10, erasing steep losses earlier in the trading session as the upward momentum in oil prices remained intact despite a continued rise in COVID-19 cases worldwide.
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Register NowAt 10:13 am Singapore time (0213 GMT), the ICE March Brent futures contract was up 7 cents/b (0.09%) from the previous close at $81.82/b, after falling by close to 50 cents/b earlier in the morning.
The NYMEX February light sweet crude contract fell 2 cents/b (0.03%) to $78.88/b.
"We have started this week on a weaker footing. Both Brent and WTI were trading lower in the early morning session in Asia," said ING analysts Warren Patterson and Wenyu Yao, citing the spread of COVID-19 cases in China as a factor.
"This is a risk to oil demand since China is the largest crude oil importer in the world. We are also approaching the Chinese New Year, a time when there is normally plenty of domestic travel, and so any domestic restrictions will weigh on oil consumption," they said.
China is currently battling another outbreak of COVID-19 infections across several states, with the latest being a cluster in the Northern city of Tianjin found over the weekend that included two omicron cases.
While no citywide lockdown measures have been announced, the city's 14 million residents have been advised to stay home and are barred from using public transport until they can produce a negative test result.
Nationwide, China reported 92 locally transmitted cases as of Jan. 8, latest data from the country's National Health Commission showed, down three from the previous day.
India reported a sharp rise in COVID-19 cases over the past week, while caseloads in the US remained at critically high levels.
The supply from Kazakhstan is expected to rise, with the Chevron-led operating consortium Tengizchevroil of the country's Tengiz oil field saying Jan. 9 that production was gradually returning to normal after protests at the site disrupted operations in the week ended Jan. 7.
While these reports weighed on oil prices Jan. 10, they came after three straight weeks of gains that have taken Brent crude back above $80/b.
Most analysts expect the upward momentum in prices to remain intact in the medium term, with global oil demand still expected to remain robust and supply remaining tight.
"The oil market's bullish narrative remains intact on the back of fading Omicron concerns and a tightening global stock situation. We remain bullish on crude oil in the short to medium term," said OCBC Treasury Research analysts in a note.
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January 10, 2022 at 09:40AM
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Crude oil futures mostly steady as omicron concerns weigh - S&P Global
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