Oil prices stopped growing and investors took a wait-and-see attitude

On Wednesday, December 8, oil prices are down 0.21% and are trading near $75.72 per barrel.

By 12:00 pm (Moscow time) Moscow’s Brent crude futures are trading around $75.31, while WTI February futures are down 0.39%, trading around $71.73.

Oil prices are down, taking a breather after two days of gains, as investors take a wait-and-see attitude and assess the possibility of damage from the spread of the Omicron coronavirus strain.

Oil prices rebounded earlier this week after collapsing a week earlier amid growing optimism that the new Omicron coronavirus strain might not cause serious economic damage. Investors, in turn, “took a break” because at this point it is still not clear whether the new strain is more/less dangerous than the previous ones.

So the Omicron strain may partially escape protection from two doses of Pfizer and BioNTech vaccines, the head of a laboratory at the African Health Research Institute in South Africa said Tuesday. At the same time, British drugmaker GSK said Tuesday that its antibody-based drug Sotrovimab, created with U.S. partner Vir Biotechnology, is effective against all mutations in the new South African strain. European Union regulators have also approved a mix of two different Covid-19 vaccines for the first vaccination and as a booster dose, arguing that the hybrid approach could increase governments’ flexibility in dealing with the omicron strain.

The market is also focused on negotiations for a return to the 2015 Tehran nuclear deal between the U.S. and Iran. Negotiations between Washington and Tehran on restoring the nuclear pact resumed a week ago, but broke down Friday and are scheduled to resume later this week as Western officials have expressed dissatisfaction with Iran’s sweeping demands. So Germany wants Iran to present realistic proposals in talks on its nuclear program, a spokeswoman for the German Foreign Office said Monday.

Meanwhile, on Tuesday, President Joe Biden warned Russian President Vladimir Putin that the West would apply “strong economic and other measures” to Russia if it invaded Ukraine, and Putin demanded guarantees that NATO would not expand further east. In addition, Biden warned Putin that he could face tough economic sanctions, disruption of the Nord Stream-2 pipeline, and that the U.S. and allies would provide Ukraine with additional defensive capabilities.

Separately, it’s worth mentioning that the U.S. Department of Energy lowered the country’s 2022 oil production forecast by 0.1 million bpd to 11.8 million bpd. The EIA also lowered its 2022 Brent crude oil price forecast from $72/bbl to $70/bbl.

Oil markets showed weak reaction to API’s weekly crude inventory data, as the U.S. crude stocks decreased by 3.089mb last week, compared to a week earlier drop of 0.747mb and the analysts’ estimate of 2.093mb.

Brent. Brent is under resistance line at $76 per barrel and trades at $75.72. Stochastic lines are out of oversold zone and pointing up, which indicates a favorable situation for buying on the instrument in the short term

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