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Oil prices drop amid omicron concerns

Brent crude

Brent crude futures shed 29 cents, or 0.4%, to $76.56 a barrel after a 2.1% gain in the previous session

Oil prices dropped on Friday in thin holiday trade following a three-day rally, with investors trying to gauge the omicron coronavirus variant’s impact on demand.

Brent crude futures shed 29 cents, or 0.4%, to $76.56 a barrel by 0205 GMT after a 2.1% gain in the previous session. The benchmark was still on track for a weekly gain of nearly 4%.

U.S. markets are closed on Friday for the Christmas holiday.

Oil prices have recovered this week as concerns 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.

But investors remained cautious amid surging infection cases, said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

Omicron advanced across the world on Thursday, with health experts warning the battle against the Covid-19 variant was far from over despite two drugmakers saying their vaccines protected against it and signs it carried a lower risk of hospitalization.

Coronavirus infections have soared wherever the variant has spread, triggering new restrictions in many countries including Italy and Greece and record new cases.

United Airlines and Delta Air Lines have each cancelled dozens of Christmas Eve flights, as the spreading omicron variant takes a toll on its flight crews and other workers.

Still, given the soaring natural gas prices in Europe and Asia, oil will likely keep a positive tone on expectations that some industries would switch fuel from high priced gas to oil, Kikukawa said.

Asian liquefied natural gas (LNG) prices climbed this week, despite tepid Asian demand, as upside risk in the European gas market remains a key driver directing price movement.

A higher U.S. rig count also added to pressure on the oil market.

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