Oil Gains on Outlook for Rising Demand as Omicron Wave Fades

© Reuters.

(Bloomberg) — Oil pushed higher at the week’s open as investors weighed prospects for rising demand as the omicron virus wave fades in key economies.

West Texas Intermediate rose toward $86 a barrel in early Asian trading after a run of five weekly gains, the best streak since October. President Joe Biden’s chief medical adviser, Anthony Fauci, expressed optimism at the weekend that the surge in the new variant will soon peak. That could underpin improved consumption as more workers return to offices and people travel more.

Crude has enjoyed a robust start to the new year, with prices soaring to the highest since 2014 last week, as demand picked up, stockpiles fell, and top Wall Street banks including Goldman Sachs Group Inc (NYSE:). issued bullish oil forecasts. At the same time, investors are weighing the possibility that Russia may invade Ukraine, as well as the outlook for tighter U.S. monetary policy.

The emergence of the fast-spreading omicron variant late last year initially spurred concern that the pandemic may be entering a new phase that would once again imperil oil demand. But the variant delivered a lighter-than-expected blow to crude consumption, enabling prices to bounce back.

Among banks, Goldman Sachs, a long-time commodity bull, expects that crude will hit $100 by the third quarter, and Morgan Stanley (NYSE:) sees the same figure and timeframe. Bank of America (NYSE:) has said that would rise to $120 a barrel in mid-2022, while Citigroup Inc (NYSE:). remains more cautious.

©2022 Bloomberg L.P.

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