Oil Surged To One-Month High Amid Diminishing Omicron Fears

Crude oil surged higher on Monday, recording gains of nearly 3% back above its $75 levels as concerns surrounding the latest Omicron variant continue to diminish.

Market risk appetite was boosted higher after more evidence pointed out that individuals who contacted the Omicron variant showed milder symptoms despite a higher transmission rate.

Countries such as London and Australia had also eased its restrictions ahead of the New Year, while the British health minister announced on Monday that the government will not introduce new Covid-19 restrictions before the end of this year.

The black commodity suffered major losses in November, falling from its 7-year highs near $85 to as low as $62 earlier this month amid concerns that the new variant could derail the global economic recovery as new daily infections surged to record high.

As the Covid-19 outlook ahead continues to clear, expectations for a robust recovery next year lifted the market sentiment while investors re-enter into riskier markets such as energy and stocks. The US S&P500 rose to an all-time-high near $4787 on Monday.

Up ahead, investors will first place their attention over to this week’s US inventories level to gauge overall market demand. Furthermore, OPEC and its allies will meet on January 4 to discuss on their production quota for the month of February. The cartel carried on this month with their plan to boost output by 400K barrels per day in January. 

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From the technical front, crude oil in its D1 timeframe broke above its psychological resistance near 73.00, while currently testing its July resistance near 75.60. MACD, moving into a bullish territory, suggests the oil to extend its movement within a longer-term uptrend. Confirmation of a bullish breakout from the current resistance zone is required before price could revisit its support-turned-resistance near 79.00.